Every business needs to keep a track of their numbers otherwise you end up being a busy fool. With the business trinity of software, bookkeeper and accountant this is relatively easy these days but even accountants can end up being too busy to keep an eye on the numbers that really matter.
Revenue – yes we want to grow this but a ‘million pound’ business can still be less profitable than one a fraction of the size.
Profit by client – how much time does it take to look after each client? Are you charging enough? Are you giving away free services outside the scope of your contract?
Profit by service/product – what is really the most profitable and scalable for you? Standard work carried out by cheaper staff or high value work that can only be done by you?
Cash runway – how many days of expenses will your current cash balance last if no further money comes in? (I was impressed that my son knew this as a freelance theatre tech as I can’t ever remember teaching him!)
Profitability per hour – we can all earn more by working 80 hours a week but this is the one that will keep you on track for a decent work-life balance and is my primary KPI.
Revenue per head – maximise this before adding more heads to your payroll
Average fee – can you increase this by adding extra useful/necessary products or services?
(I’ve just realised that I’ve used m-dashes but it really is me writing this and not AI!)
ICAEW Business confidence monitor
UK UK Business Confidence Monitor: National | ICAEW
SouthWest South West | ICAEW