You work hard to grow your business, and your financial reports reflect those efforts. Your P&L, cash flow statement, and balance sheet tell the story of where you’ve been, but they also show how far you can go. Here are some ways you can translate that data into an action plan for expanding your market footprint.
It’s great that you have a quality service, but how do you prove it? Your clients measure value by evaluating your sales returns. Consider including your growth trends in your marketing materials. Highlighting this data will boost client confidence and make you stand out against competitors.
Healthy investments maximize growth. Raising capital requires proof that your company can generate returns. Although potential investors, analysts, or creditors will review your financial statements, it is equally important to provide them with metrics.
Metrics illustrate the health of your business, generating valuable insights related to liquidity, competitive advantages, and sustainability. Want to stand out against your competitors? Publish your average revenue/customer in comparison to market trends.
You never know when might get the call from an industry publication that wants to feature your company in an article. Providing financial ratios that are easy to understand highlight your newsworthiness and help you stand out from your competition. Calculating growth over time as a percentage, for example, can speak to how much personal commitment and human capital you’ve poured into your business.
Two useful calculations mentioned above are broken down below:
Percentage of Growth Over Time: For business owners, it is imperative to know how much your company has grown over time or at certain milestones. This calculation shows your business expansion and helps to explain your growth to stakeholders, potential creditors, and/or investors.
This formula can be used in many ways—to show customer growth, revenue growth, sales by category growth, or any other unit measurement you feel is important to highlight. You can use this over any time measurement as well: days, weeks, quarters, months, or years.
Percentage of Growth over Time =
(Ending Value – Starting Value)/Starting Value
For example, ACME Widgets has grown its sales from $1000 in June to $5000 in July.
($5,000 – $1,000 = $4,000) / $1,000 = 400% growth in 1 month.
Average Revenue per Customer: This shows how much revenue you make on average from each customer. To calculate, divide your revenue by your total units sold (including hours worked, for service-based businesses) or simply by customers. This formula is useful for roughly forecasting future sales, understanding your current customer capacity, and identifying the overall revenue value of one customer.
Average Revenue per Customer = Revenue / Total Customers.*
*Customers can be interchanged with hours or another measurable unit.
For example: $500,000 Revenue / 40 customers = $12,500. The average revenue per customer is $12,500.
If you would like to know more about how your financial reports can help you grow your brand, ask Stride about how a CFO Advisory Partner can elevate your brand in the months to come.