8 Financial Questions Every Business Owner Should Ask Themselves

1. How much does it cost to run my business?

Understanding every cost and financial liability associated with your business is crucial. Beyond rent and utilities, consider expenses for advertising, infrastructure maintenance, and upgrades. Ignoring these costs can deplete your working capital and jeopardise sustainability.

2. How much profit does my company actually make?

Distinguishing between gross and net profit is vital. Gross profit accounts for expenses and reserves, while net profit factors in taxes. Accurate profit calculations are essential for business stability and growth.

3. What is my company’s monthly recurring revenue?

By tracking recurring revenue fluctuations, a company gains insights into its trajectory. Whether it’s a 50% customer retention rate or a mere 10%, recurring revenue models enable accurate future sales forecasts and highlight growth opportunities. This consistent income stream enhances predictability, extends customer lifetime value, and ultimately increases the overall value of the company.

4. What is my business credit score?

Monitoring your business credit score regularly is essential, not just for loan applications but also for securing future funding and expansion. Improving your credit score over time ensures financial flexibility when needed.

5. What is the cost and income per unit for my business?

Analysing cost and income per unit provides insights into financial viability and stability. This metric helps in decision-making regarding product offerings and pricing strategies.

6. Do I know the drivers of my business growth?

Identifying key performance indicators (KPIs) and tracking them regularly is essential for sustainable growth. Understanding what factors contribute to business success enables informed strategic decisions.

7. What are the financial highs and lows in my business?

Establishing a budget helps manage financial fluctuations. Prepare for revenue peaks and valleys to maintain stability and capitalise on opportunities.

8. Do I have a handle on my cash flow management?

Profitability doesn’t guarantee positive cash flow. Understanding the relationship between profit and cash flow, and implementing strategies to improve cash flow, is critical for long-term success.

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