When I look at the statements for my bookkeeping company every month, I’m looking for several things:
Gross margin is second for me right now because I’ve hired 2 people at once, both with more experience (and more pay) than I’m used to. I want to pay them well and I need to continue to make a profit, so I’m watching this number carefully.
*Gross Margin is the percentage of every dollar of sales left after paying Cost of Goods Sold.
There are 2 kinds of expenses in your business: selling/production (aka Cost of Goods Sold) and overhead. The Selling/production expenses are what it costs you to produce and sell each unit. You should be able to make a direct link from the cost to a particular sale.
That’s what I look for now. Sometimes I’ll follow other numbers depending upon what is important at the time. What numbers are important in your business?
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