How do I know whether my business is growing profitably?
Revenue growth is only useful if the business keeps enough of it. Track gross margin and operating profit alongside sales so you can see whether growth is creating value or simply creating more work.
Don't judge growth on turnover alone
Revenue growth is only useful if the business keeps enough of it. Track gross margin and operating profit alongside sales so you can see whether growth is creating value or simply creating more work.
Watch what the growth is costing you
New staff, marketing, premises, stock and systems often arrive before the extra revenue. Compare those costs with the additional contribution they are expected to generate.
Make sure the cash works too
Profitable growth can consume cash if customers pay slowly or working capital increases. A cash forecast helps show whether the business can fund the growth it is pursuing.
Break down what is actually driving the result
Break performance down by the parts of the business that matter � product, service, team, project or customer type. Overall profit can hide one area doing well and another destroying margin.
Outsourced Finance & Bookkeeping
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