Understanding your key numbers

At Kinder Accountants, we are not just bean counters reporting on history, we are committed to you and your success, and we can do this by homing in on your 7 Key Numbers.

 

We know how business works and we understand the issues you face as a small business. We are here to help you overcome these challenges.

In this digital age, the team at Kinder Accountant are leveraging the power of technology to deliver better services and exceptional client experiences.

Technology is enabling us to ensure that we are able to offer you the support you need to realise your goals.


“Accounting is the language of business”

Warren Buffet

 

Our team are committed to helping you gain a clear understanding of your numbers and how to make them better. We’ll develop step-by-step action and business development plans with you to build your  better business. Through the use of our structured online data room, we’ll support you to access the cash, funding and investment you need to grow and scale profitably.

We are your accountability buddies. We take time to understand  your business and needs, so we can tip the scales to make sure your business survives and thrives in today’s uncertain world.


The 7 Key Numbers

There are many complicated numbers behind a business.

We work with you to focus on and understand the 7 simple, key numbers that are crucial to your business. We’ll then create an Action Plan with you to improve these numbers, and your business.


So what are the 7 Key Numbers?

1. Revenue Growth

The first number is revenue growth. We’re looking at the revenue this year compared to the previous year to look for changes, and how this compares with our expectation.

Most businesses do want to grow, but through the at the moment, many businesses are simply aiming to get back to where they were before lockdown.

So we’re tracking here to make sure that the business is going in the right direction.

Revenue is a really good indicator of a growing business. It’s not the be all and end all as you’ll find out, but it’s a good indicator.

2.  Gross Profit Percentage

The next number is gross profit percentage. We’re looking to see that the business is making  a good amount of profit from its main activities. Those costs that it incurs to make sales and also deliver the services or goods that they provide. What’s left after these costs is your gross profit.

Your gross profit percentage is simply the gross profit divided by your revenue.

3. EBITDA percentage

The third number is EBITDA percentage. So, the EBITDA stands for earnings before interest, tax, depreciation, and amortization.

We strip out those costs and then look at the earnings, or the adjusted profit in line with revenue, and again make sure that the percentage is in line with your goals.

This is looking more at overhead costs rather than cost of sales, which is covered in gross profit percentage.

4. Revenue per employee

Revenue per employee is a great number, because it doesn’t just look at the one fraction of the business, it looks at lots of different things.

We’re looking at revenue obviously, and employee costs.

We’re also looking at employee capacity and productivity, and are they using the systems correctly? Do they have enough training? Are they using the right tools?

It’s one number that looks at many different areas of the business, and it’s not just in isolation. So, it’s a really joined up approach to running the business from that one number, and it looks at culture as well across the whole board.

5. Core cash target

The fifth number is core cash target. This looks at the amount of cash that the business needs before starting new projects or paying shareholders more dividends etc.

It looks at the total taxes due and adds an element of overheads as a buffer. So it’s an amount, or core cash target that the business should have in reserve ideally.

Any cash over and above that is surplus and can be used in the future for new projects, for additional payments to the business owners, or for recruiting new team members.

6. Cash days

Cash days is the sixth number, this is also known as working capital days. We’re looking at four different numbers here;

  1. Accounts receivable days: how long it takes for your customers to pay.
  2. Accounts payable days: how long it takes for you to pay your suppliers.
  3. Inventory days: how long it takes for your inventory, your stock to be turned into cash.
  4. Work in progress days: how quickly your work in progress is turned into cash.

So, it’s those four numbers put into one, called cash days. And that gives you a snapshot of how long it takes for the money to go through your business. And again, it’s an indicator of those four different areas.

So, it’s a bit like revenue per employee, it looks like at a multitude of different areas within your business to make sure that you’re doing the right things in different areas, and you can tweak at least four different areas there to make those numbers improve for your business.

7. Business return

And the final number is business return. We’re looking at what your business is worth to you based on its current profit.

Is the business producing a good enough return, or should you just stick your money that you invested into your business into the bank?

That’s another way of looking at it to make sure that your hard work and effort into your business, and running your business, is actually producing the type of return that you want it to produce.


What next?

If you’re ready to focus on and understand your key numbers, and identify areas for improvement, book a call with Sharon for an initial review of your 7 Key Numbers and commit to taking your business to the next level. This is £795 plus VAT, which we will invoice before our first session together.