We hear small business owners says they are bad at maths or ‘numbers idiots’. You’ll need some basic knowledge of the numbers in your business, start with the fundamentals and build on that as you get comfortable.
Income – this one is easy to measure. Hopefully its more than last month/quarter/year. Are there seasonal trends in your business? Really busy at Christmas, or super quite during the summer holidays?
Wages – in service businesses, this is the biggest expense. Do you have the right mix of staff, full time, part time and casual? Casual workers are designed to fill gaps, you get them in during busy times, but don’t call on them when things are quiet. Full time and part time staff have set hours and wages – they need to be paid even if there is no work to do.
Expenses & Cost of Sales – generally this number should be smaller than income, otherwise you’ll be making a loss! When you start your business, or perhaps a big new project, you’ll probably have expenses before you generate any income.
Small Business Maths 101: Income – Expenses = Profit
Menu
