FAQ's - Measure & Manage

As a minimum you should know your breakeven point. This is the level of sales or income needed to be able to pay all the expenses, taxes, and financial commitments. It’s not the point at which Net Profit is Nil.

The short answer is, it depends.

Each industry has different key numbers. These may be productivity in a professional service firm, wastage in a food service business, time lost to breakdown in a manufacturing facility.

The best place to start is your industry body. They collect statistics on the industry and will either have an overall average or a scale of below average, average, and above average. The ATO also have industry benchmarks and whilst they are useful, they are limited.

You need to understand your Profit & Loss (income and expenses, and how they relate to each other), Balance Sheet (what you own and what you owe) and your Cash Flow Statement (where cash comes from and goes to) are vital.

Yes. Three numbers each business should know are;

1. How many active customers do I have?
2. How many times a year, on average, does a customer make a purchase?
3. How much, on average, is each transaction?

This should equal your annual revenue, and from these numbers you can work out where to focus to drive revenue upwards.

No. At the end of the day the amount of profit you make and having a continuously positive cash flow is way more important than what the top line income is. It’s what you keep that matters.