With the use of technology today, there are no excuses for not knowing every single bit of information about how your business functions. But it is true that some numbers are greater than others. Let’s have a look at some of the business numbers that every business should have at hand:
Bank Account Balance
It is no wonder that the saying “Cash is King” is so common amongst small business literature. This is because it is true. Having cash in the bank can provide for so many things like growth, new assets, keeping creditors at bay. But it is also the number one thing that keeps small business owners awake at night. That being said, it is the easiest number to have at hand just by logging in to your internet banking suite or if you are on Xero you will have this front and square on your dashboard.
Running an Accounts Receivable report from your accounting package should be all it takes to get the numbers of who owes you money. Make sure that your business has a strategy on when it will send out invoices but just as importantly, how you are going to get that money in the bank. Using 30 day terms is suitable for some businesses but it can be a noose for others. You want this number to be high (as it means there are lots of sales) but also to go up and down quickly meaning that you collect quickly too!
Wages (and Superannuation) Payable
There is no other number that can impact your business quite like unpaid wages or superannuation. Most Employees work hard to earn their pay check and in return they put their trust in their employer to pay their wages, taxes as well as their superannuation benefits. But if these amounts remain unpaid they can also cause the biggest headache for business owners. Fair Work Australia and the Tax Office as well as other organisations may take outstanding employee obligations above other debts such as GST because of the direct impact on the employees.
Product Gross Profit
Can you clearly work out how much it costs you to sell one item? Take a café for example. They sell one cup of coffee for $4. Let’s assume that the cup, coffee, milk, and sugar costs them $1.50 making $2.50 gross profit per cup. Knowing this, the café can determine how many cups they need to sell in order to make a net profit after other expenses such as wages, rent, rates etc are taken into consideration. This same calculation can be done for any business including the service industry.
How many customers do you have? What is the average sale to a customer? How often does a customer buy from you? Being able to increase just one of these numbers will ultimately make your business grow. The best way to keep track of this is to use a Customer Relationship Manager (CRM) or Point of Sale (POS) that also integrates with your accounting package. Using customer loyalty programs and customer surveys is also another great way to keep track of who buys your product or service.