The 7 Financial Numbers Every Business Owner Should Know.
To help ensure that your business stays in the black, take the time to familiarize yourself with these seven key
1. Cash Flow
constitutes the result of subtracting all your expenses, including taxes, from your income. It's not adjusted for items
like depreciation. Like cash flow, your net profit is a good indicator of whether you're earning or losing money.
income (sales and revenue) minus expenses during a specific period of time, which is generally quarterly, every six
months or yearly. Knowing your company’s profit and loss over time allows you to project earnings and make
realistic plans for the future, both short term and long term.
critical number's list. Keeping a close eye on sales is important, as a dip could be a warning sign of trouble. In the
same respect, it’s important to pay attention when sales are up. Determining why business is good at the time your
company's on an upward trajectory is easier than trying to figure it out later. Reacting quickly to an increase in sales
also allows you to determine what you need to keep doing to sustain that growth.
need to sell those goods or services in order to make a profit,” says Petri, who notes that this is an especially critical
number for restaurants and other retailers. “When you determine price point," he adds, "make sure to take into
account all overhead expenses, such as utilities, payroll and sales tax.”
actual cost of your merchandise is subtracted from the selling price. If this figure is low and not sufficient to cover
your operating costs, such as salaries, rent, marketing and utilities, then you're likely not charging enough for your
products and services.
as this could be a sign of sales trouble. By tracking inventory on a regular basis, you can spot problems early enough
to avoid the negative effects of excess inventory, which include
storage costs, reduced profits and potential waste.
these must-know figures will give you precious peace of mind—and a glimpse of what the future holds for your