Some business owners might boast about their revenue. But the reality is, revenue gives you little understanding of the business as a standalone figure.
What is revenue? Revenue is the amount of income your business generates before you deduct any costs and expenses.
Whilst some people like to milestone their revenue achievements, it’s important to note that looking at revenue alone is a vain way to discuss business. Your revenue could look very healthy, but your business could potentially be running at a loss.
Looking at your profit can give a much clearer picture of your business.
What is profit? Your profit is the what is left of your revenue after deducting all your costs and expenses. This will give you a much more lucid picture of your business and what you are dealing with.
However even if your revenue is great and you are a profitable business there is one factor that trips up small business owners – cash flow.
Up to as many as 80% of start-up businesses fail as a result of poor cashflow. A lot of businesses see their bookkeeping as a way to be compliant with the ATO, but in actual fact being up-to-date with all your financials gives you a clear snap-shot of your business so you can see exactly how you are tracking. Without this clear picture, your business can quickly fall into trouble.
So, whilst we might gloat about our revenue, and remark on our profits, the business can only survive with a good solid liquid cashflow.
Talk to Odyssey Business Knowledge, we can help keep your business on track. By having up-to-date financials, you will never be in the dark about the state of your business. We can consult with you to adapt new strategies where needed, so you don’t become another statistic.