Parts that Drive Revenue:
- Leads
The number of potential customers entering your sales funnel. - Conversion Rate
The percentage of leads that turn into paying customers. - Retention Rate
The ability to keep customers coming back for repeat business. - Purchase Frequency Rate
How often customers make a purchase within a given period. - Average Transaction Value
The average amount a customer spends per transaction. - Revenue
The total income generated from sales before expenses. - Profit
The net income after all costs, taxes, and expenses have been deducted. - Cash Flow
The movement of money in and out of the business, crucial for operations.
Parts that Drive Profit:
- Cost of Goods (as a % of Revenue)
The direct costs associated with producing your products or services. - Marketing Expenses (as a % of Revenue)
The costs spent on marketing efforts to attract and retain customers. - Payroll Expenses
The total cost of compensating employees, including wages, benefits, and taxes. - Overhead Expenses
Indirect costs necessary to run your business (e.g., rent, utilities). - Other Income/Expense
Non-operating income or expenses (e.g., investments, interest).
Parts that Drive Cash Flow:
- Days Sales Outstanding
The average number of days it takes to collect payment from customers. - Days Inventory Outstanding
The average number of days products sit in inventory before being sold. - Sale or Purchase of Assets
Impact on cash flow from buying or selling business assets. - Days Payable Outstanding
The average number of days it takes to pay your suppliers. - Using or Paying Down Debt
The impact of repaying loans or taking on new debt. - Owner Investments or Distributions
Cash invested or withdrawn by the business owner.