This document discusses 5 key numbers that every business owner must know and manage. It lists the 5 numbers as: 1) Gross profit percentage and breakeven gross profit value, 2) Your true profitability, 3) Cash conversion cycle, 4) Scale ratio (labor efficiency ratio), and 5) Core capital target. It emphasizes that understanding accounting numbers is important for business owners to know the health and performance of their business.

1. Wednesday 29 June 2016 12:00
The 5 Key Numbers Every Business
Owner Must Know (and Manage)

2. We thinkdifferently, are
inno
va
tive and
to challenge the status quo.

3. Connect with us
@aynsleydamery @tayabalitomlin
TayabaliTomlin &Tayabali Entrepreneurs Group
TayabaliTomlin &TT Entrepreneurs Club
Download theTayabaliTomlin App
#enTTrepreneurs

4. Purpose
“…. we want to enable the UK small
business community to thrive through
innovative accounting solutions,
inspirational advice and powerful
connections”

6. Small business is BIG business
5.4m small businesses in the UK - (up by over 2m since 2000)
CombinedTurnover of £1.8 trillion - (½ of the entire private sector)
Incredibly, 1 in every 3 new jobs in the UK in 2014 was created
by high growth small businesses
..and, if 1 in every 3 small businesses employed another person,
there would be no unemployment

7. Small business survival rates
< 5 yrs
41%
< 10 yrs
10%
< than 5 years and
using cloud
accounting = 88%

8. Profit distribution in UK Companies

9. Why is that? - well everything has changed!
Increased competition and downward pressure on pricing
Proliferation of small business
Barriers to entry generally low and exit relatively high
Technology is cheap making scalability easier
Production facilities are easier to access
Global market - open 24/7
Internet and social media
Operational excellence and adopting best practice,
now only get you in the game!

11. “If you can’t read the
scoreboard, you don’t know
the score.
If you don’t know the score,
you can’t tell the winners
from the losers.”
Warren Buffett

14. Understanding the language of
accounting
Accounting MBA in Half a Day

15. Statement of Financial Position
THINGS & STUFF
Cash
Accounts Receivable
Inventory
Property, Plant
& Equipment
OWE
OWN
Account Payable
Taxes Payable
Debt Payable
Share Capital
Earnings:
Current
Retained
Statement of
Comprehensive Income
Sales
- Expenses =
Earnings
Profit Bottom Line
Net Income
Statement of Cashflow
Operating +/-
Financing
+/-
Investing
+/-
Opening cash
Closing cash
World Atlas
Street Map
Street Map

16. Sales
Profit
CashOperating!
Assets

17. Do yo manage your
business by the health
(or otherwise) of your
bank account……….?

18. Management
Decisions
Activities
Numbers
Accounting
Report Card
Business
Optics =
Scoreboard

19. Accounting systems
Activities
Numbers

20. Dig here

21. No ONE SIZE FITs ALL!
Statistics can lie!
This cannot be done in isolation
You need to understand what
you are measuring, that the data
is accurate and the underlying
reasons for the result

22. 01
GROSS PROFIT %
& BREAKEVEN GP
£ VALUE

23. YOURTRUE
PROFITABILITY
02

24. 03
CASH
CONVERSION
CYCLE

25. 04
SCALE RATIO
(LABOUR EFFICIENCY
RATIO)

26. 05
CORE CAPITAL
TARGETJFDI!

27. TO
CONCLUDE