Are you using metrics in your business?
What’s the most important metric for an SME? Of course, it depends on your sector and your situation. However, our accountants agree that SMEs should be thinking about these top 4 metrics in the financial health of their businesses.
What’s the most important metric for an SME
Revenue – The total amount of money earned by the business through sales of products or services. This is an essential KPI as it reflects the company’s ability to generate revenue and grow its customer base.
Gross profit margin – The percentage of revenue that remains after deducting the cost of goods sold (COGS). This metric is critical because it measures the efficiency of the company’s production processes and pricing strategy.
Net profit margin – The percentage of revenue that remains after deducting all expenses, including COGS, operating expenses, and taxes. This metric reflects the company’s ability to manage its expenses and generate profits.
Cash flow – The movement of cash in and out of the business over a period of time. Cash flow is critical to the financial health of an SME, as it reflects the company’s ability to meet its financial obligations, such as paying bills, salaries, and other expenses.
Our accountants love working with SMEs especially as they run a business themselves. Talk to us about how we can work with you. With nearly 200 accountants around the UK, we’re sure we can find one that’s perfect for you.