Running a successful business takes more than hard work. It takes understanding the numbers that drive your success. If you want to stay ahead, keep a close eye on these five key financial metrics that can make or break your business.
Are you selling more units over time, or are sales growing only because of higher prices? Tracking unit sales reveals whether you’re truly gaining market share or quietly losing it. Pay attention to trends in customer demand and return rates. Declining unit sales may signal the need to re-evaluate your pricing, product mix, or marketing strategy.
Do you know how much you need to sell to cover your expenses? Your break-even point shows whether your sales are enough to keep your business sustainable. If you’re dipping into savings or reserves to pay bills, it’s a red flag that costs or pricing may need adjustment. A clear break-even analysis helps you set smarter sales goals and pricing strategies.
How strong is your cash position? Liquidity measures your ability to meet short-term obligations. Regularly comparing your bank statements to your accounting records ensures your books are accurate and up to date. If your cash flow is tightening, it’s time to act quickly, cash shortages can escalate fast.
Is your inventory helping or hurting your cash flow? Holding too much stock ties up valuable cash and drives up storage costs. On the other hand, too little inventory can lead to missed sales opportunities. Striking the right balance ensures you’re not losing money sitting on unsold goods.
Is your team the right size for your business goals? Payroll is often one of the largest expenses for any company. Tracking sales per employee helps you understand if your workforce is operating efficiently and whether productivity is improving over time. The right staffing level can boost profitability without overextending your budget.
Understanding these five key numbers is the first step. The next is tracking them consistently. At Alloy Silverstein, we can help you build a financial dashboard that gives you real-time insights into your company’s performance. From cash flow to payroll ratios, we’ll help you monitor the metrics that matter most, so you can make smarter, data-driven decisions.
Director of Small Business Services
Janine works one-on-one with small businesses who outsource their bookkeeping and business financial reporting to a knowledgeable, efficient, and trustworthy advisor.
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