In order for your business to grow you need to be monitoring your metrics. You cannot expect your business to magically take flight if you have no idea what is going on in it. And by going on I don’t mean just in operations because that is just one side of the house. You need to know what the number say about your business. You need to know your numbers in order to grow your numbers.
Here are 5 metrics that will boost your bottom line.
- Annual Revenue Goal – This number is the sum of how much income does your business need to generate to pay you, your team and your business expenses each year. Without a goal you have no idea what you are working towards to have a successful business. You can also break this number down into a monthly goal to make it more attainable.
- Gross Profit Margin (also called Gross Margin or Gross Profit) – This is your profit generated only from transactions that are directly related to what you do. This number tells you whether or not the product or service you sell is generating a profit. If it is great. If it’s not you may need to tweak a few things.
- Net Profit Margin – This is the net revenue after you have deducted ALL of your costs – fixed and variable; direct and indirect. This is the try bottom line number in your business. This is the number that needs to turn into cash at the end of each year.
- Breakeven point – This is the point at which you cover all of the costs in your business and begin to generate a profit. You must know this number in order to effectively develop strategies on how to grow your business.
- Current Ratio – This number lets you know whether or not you can meet your obligations as they become due. It compares your current assets to your current liabilities and lets you if there is enough working capital to help the business maintain.
What metrics have helped you grow your business?
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