3 THINGS YOU MUST DO BEFORE APPLYING FOR BUSINESS FINANCE Funding and Business Growth Playbook T: 0330 350 3356 @: hello@GrowingYourNumbers.com www: growingyournumbers.com
We can see what Alex’s business has achieved over the last two years and it is looking good, profits are up.
A quick look at Alex ’s Profit and Loss Statement this year vs last year shows a steady performance in terms of Revenue, remaining flat at just over £ 1 million with a substantial increase in the bottom line.
Net Profit is up from £60K to nearly £80K, driven by a margin improvement of 1% that added £10K to the bottom line, overheads are down by £10K, things are looking OK for Alex, the business and all who depend on its ongoing success
Net Profit is up by a third, so far so good. Presumably, Alex is happy with the performance of the business and is looking forward to a significantly larger dividend payment this year than last.
Remember, these are Lag Indicators, so let us Recap on the Lead Indicators and discuss each of the Business Growth Drivers in turn.
Average Transaction Value
Does Alex know the Average Transaction Value for the business? Do you know the Average Transaction Value for your business?
Average Transaction Value is one of your critical Key performance Indicators and it is easy to calculate:
Total Revenue divided by the Total Number of Transactions
If you need help working out what the Average Transaction Value is for business, your accountant should be able to tell you where to find the necessary information. So long as your Bookkeeping is accurate all the data you need is in your accounting system.
As soon as you know your Average Transaction Value, you can compare it to the prior period, e.g., this year vs last year to establish your underlying trend, or the current direction of travel.
As the saying goes:
‘ If you keep on doing what you are currently doing, you will keep on getting what you’ve already got’.
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