The Four Key Numbers to Measure in Your Business Through Record Inflation

Before introducing you to these numbers, let’s delve deeper. You cannot improve anything that you’re not measuring already. The sooner you start measuring these key numbers, the sooner you will start to improve them, automatically.

It is also essential to have a target for each of these numbers based on where you envision your business to be.

The 4 Key Numbers:

Gross Profit Required

Now gross profit is what we label your ‘real income.’  After paying for the direct costs of delivering your product or your service, mainly your materials and labour, and the other incidentals around it, what are you retaining? Out of every dollar that you earn, how many cents do you allocate to continue operating your organisation while ideally making a healthy net profit?

Your total sales income is what we deem a ‘vanity’ number. Your gross profit is what you’re retaining, this is your ‘reality’ number.

Break Even Point

Your break-even is the total amount of income that you require to generate, to cover only the costs in your business. To calculate your break-even, you need two numbers: 1. The fixed overhead amount per month, and 2. you need to know your gross profit percentage. After which, take your overhead amount and divide it by your gross profit percentage. This figure is your total break-even amount. From here, you can calculate how many jobs you require to win, complete, invoice and be paid for, to cover this amount.