Numbers Every Small Business Owner Should Know

Posted 30 Jul 15

As a business owner you will be expected to keep a track of various numbers, all representing different areas of your company management.

From deadlines to your company records, it can be very overwhelming to keep up to date with all of them.

When focusing on the future of your business, it is likely that you give less attention to its past; however, if you want your company to succeed on the market, it is crucial that you know and understand the numbers which constitute the overall financial image of your company.

1. Cash Flow

Tracking your company’s cash flow gives you a detailed view into the financial state your business is in. The cash flow is the figure you calculate by deducting the operating expenses from the money your company earns during normal business activities.

When your operating cash inflow is lower than your cash outflow, you should take a closer look at your income and expenses.

2. Net Income

Net income is the figure you calculate by deducting all the company’s expenses from your income, including taxes and National Insurance contributions. Similar to cash flow, net income offers you a clear picture of you’re earnings and losses.

3. Expenses

This figure can depend on a lot of factors and change throughout your company’s existence. There is a stigma attached to this word and a lot of people are afraid of expenses getting higher, seeing them solely as income loss. It is important to understand how different expenses relate to your business.

Keep a track of every transaction you make as a company owner, the income of your employees, and the bills and taxes you need to pay. Some expenses can come back to you in a form of great profits - if on a regular basis, you use a percentage of your income for marketing purposes, you might expect results in the future.

4. Sales

As a business owner, this figure might be the most important to you. Keeping a close eye on sales can prevent your business from failing.

Determining why your company is in a good or bad position at the time allows you to plan your expenses better and avoid dips in the company’s budget. Reacting quickly to an increase or decrease in sales is one of the most important skills you will need to learn if you want your company to succeed.

5. Inventory

One of the quickest ways to spot if your company is not making enough sales is through monitoring your inventory numbers on a regular basis.

By keeping records of your inventory you can prevent problems early enough and avoid financial losses in the future.

Keeping track of all the above figures is crucial in the development of your business, however, it can be overwhelming when you need to take care of your company’s accounts and records and ensure they are delivered to the right places on the right time.

At Tawanda Accountants we make sure our clients never have to worry about a missed deadline or lost record. Contact our experts today to see how we can take care of your accounts, so you can benefit the most from the experience that is having a successful company.

About Us

As a leading UK accounting firm and expert business consultancy, Tawanda Accountants carry out scrupulous accounting and provide payroll services and procedures for small businesses, individuals and business start ups.