When we meet business owners, one of the first things they tell me is their turnover.

• “We’ve hit £2 million.”

• “We’ve grown by 20%.”

• “We’ve had our best sales year yet.”

That’s great, but turnover on its own tells me very little.

We’ve seen businesses double their turnover and end up with less cash in the bank than they had before. I’ve also seen businesses with relatively modest sales generate excellent profits and strong cash flow year after year.

The reality is that turnover and profit are only part of the story.

A business can be busier than ever but becoming less efficient. Sales can be rising whilst margins are shrinking. Profit can look healthy whilst cash is disappearing.

That’s why we encourage clients to look beyond the headline numbers.

One of the first areas worth monitoring is gross profit margin. If sales are increasing but margins are falling, something has changed. Perhaps supplier costs have risen, jobs are taking longer to deliver, or pricing hasn’t kept pace with the market.

Spotting these trends early gives you the opportunity to do something about them before they become a bigger problem.

Cash flow is equally important.

Most businesses don’t fail because of a lack of profit. They run into trouble because they run out of cash.

You may be showing a healthy profit on paper, but if customers are taking longer to pay, cash can quickly become stretched. Understanding debtor days, future commitments and upcoming tax liabilities often gives a far more accurate picture of financial health than the profit figure alone.

We also encourage business owners to spend less time looking backwards and more time looking forwards.

• How much work is already secured for the next six months?

• What will the corporation tax bill look like next year?

• Can the business afford that new recruit or investment?

• What happens if a major customer is lost?

The answers to these questions are often far more valuable than knowing last month’s turnover.

The businesses that consistently perform well aren’t necessarily the ones with the biggest sales figures. They’re the ones that understand their numbers and use them to make better decisions.

At its heart, good financial information isn’t about producing a set of accounts. It’s about helping business owners sleep better at night, make decisions with confidence and take control of where the business is heading.

Sean Farnell, Partner at Burgis & Bullock, said:

“The most successful business owners I work with don’t just look at turnover and profit. They understand what sits behind those figures. They know where cash is going, how margins are changing and what challenges might be around the corner. That’s the difference between looking at the numbers and actually using them to run a better business.”

Want to understand what your numbers are really telling you?

Whether you’re planning for growth, looking to improve profitability, concerned about cash flow, or simply want a clearer picture of how your business is performing, our advisers can help you turn financial information into practical commercial insight.

To arrange a no-obligation conversation with one of our team, contact Burgis & Bullock on 0345 177 5500 or info@burgisbullock.com

Because good decisions start with good information.

Sean Farnell, Partner at Burgis & Bullock