We’ve all heard the phrase, “know your numbers” but what does it actually mean? Understanding your numbers can transform your business so today I’m sharing which numbers you need to know and how this knowledge can empower you to make strategic decisions and keep your business healthy.
When I talk about knowing your numbers, I mean having a clear understanding of the financial aspects that matter to your specific business. It could be analysing your Facebook ad spend, monitoring your product levels, or examining your overall business financials. It really does depend on your unique business and the industry you’re in, but by knowing the numbers important to your business, you will gain valuable insights into your business's financial health and be able to make informed decisions.
To truly grasp the health and profitability of your business, there are key financial metrics that you should be familiar with. Firstly, revenue or sales. While revenue alone doesn't indicate profitability, it is the lifeblood of any business. Understanding where your revenue comes from and the various revenue streams you have is crucial. Next, expenses, both fixed and variable. Fixed expenses remain consistent, while variable expenses fluctuate based on your sales. By understanding these expenses, you can identify trends and make adjustments to ensure financial stability.
One of the most important numbers you have to be across is your taxes. The two big taxes in Australia are GST (goods and services tax) and income tax. Staying on top of these numbers will ensure you have enough money set aside when it comes time to pay your bill.
While there are key financial metrics that apply to all businesses, it's important to tailor your focus to your industry and goals. Different industries have unique nuances, revenue streams, and expense structures. Therefore, it's crucial to identify the specific numbers that matter most to your business.
You don't need to be a financial expert to grasp these concepts. Through the right tools, resources, and training, you can equip yourself with the knowledge to embrace and utilise these numbers effectively. So, start your journey towards unlocking the power of knowing your numbers today and watch your business flourish!
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