This Business News Story Was Uncovered By Us From: https://blog.eonetwork.org/2022/09/4-financial-metrics-every-entrepreneur-needs-to-know-to-grow-your-business/
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Contributed by Shawn Johal, an EO member and former president of EO Montreal, who is a leadership speaker, bestselling author of The Happy Leader, and founder of Elevation Leaders, a business growth practice helping companies 10X their business valuation.
A whopping 77 percent of business owners wished they better understood the numbers within their business, and 82 percent of businesses fail due to cash management problems.
No matter your background, understanding the financial metrics that govern your business can be daunting. I know because I’ve lived it myself.
In our first business, a manufacturer and distributor of LED lighting solutions, we were committed to growth: we implemented the Scaling Up methodology and grew very quickly over twelve months.
Things were going great—until we realized there were key numbers that our business depended upon, which were not optimized. We didn’t know “which numbers” we needed to work on, so we tried them all. We systematically reviewed every financial and operational metric within our business until things began improving.
What I learned in the process: Profitable growth is entirely achievable for every company, and as entrepreneurs, we don’t need to know every number inside out. Four key financial metrics will contribute to major positive transformation within your company—learn, optimize and retain a bird’s eye view on them, and the sky is your limit!
Here they are:
1. Cash flow
Cash flow: The change in deposits plus the change in debt in your company.
It’s the first— and most important—metric to understand. In simpler terms, it’s the net balance of cash moving in and out of the business at a specific point in time. Many common business transactions fall into and affect cash flow. Purchasing inventory from suppliers and paying wages to employees count as cash moving out, whilst selling merchandise to… Read More
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