The Five Key Numbers you should check regularly in your Financials

We are often asked which are the most important numbers to focus on in the financial statements.

So, we’ve put together a list of the Top 5 Numbers to check regularly in your financials.

In our opinion, even though your financial statements are full of numbers, there are FIVE super important ones which you need to check on a regular basis. This will ensure your business is on track and profitable. If these numbers are off a bit, or outside expectations, by checking them regularly, you have time to put in place the necessary adjustments to get them back on track.

1. Sales.

   Check the level of sales you are making. Sales of last month, last quarter and year to date. It’s best to compare this to your budget, to see if you’re tracking in line with your plans.

2. Cost Of Goods Sold.

   This is one of the critical numbers for a business that buys goods in, converts them and sells them. It’s a measure of how well you trade. Show this as a % of Sales to get the most meaning. Important to track this over time and definitely compare to budget, or benchmark.

3. Wages %

   Wages as a % of Sales, shows the proportion of sales spent on wages. As one of your biggest expenses, it shows how effective your team is. Keep a close eye on this %.

4. Net Profit.

   You need to make a profit to survive. So, monitor Net Profit each month, quarter and year to date. Compare this against your budget. Is there a profit? Is it enough?

5. Current Liabilities.

   This shows how much you owe suppliers. Include Tax and Super in this to get a realistic figure. Your ability to pay your bills is a key indicator of the financial strength of your business.

These are the key numbers to check regularly. If you’re not happy with any of them, look for ways to improve them.

Let me know if you need a hand.

Peter

Is it a good idea to buy a Poolwerx franchise?

Are you thinking of buying a Poolwerx franchise?

This might be a really good time to consider it.

With COVID restrictions impacting people’s travel plans, more people are staying at home.
And with summer here, we know pools will be getting a lot of attention.

A Poolwerx franchise is a well developed franchise model. In fact, they have a development plan for you as the franchise owner.

In the Poolwerx franchise model, you typically start out as a ‘man in a van’ to get to know the business. This helps you learn how the technical side of the business works and lets you build your customer base at the same time.

Then as it grows, the model is that you take on another van, with a technician in the second van. So, that means you have two vans on the road. Fully signwritten, which means you’re getting twice the amount of visibility in your territory.

The plan then provides for a retail store after a few years. A sensible growth path, building your business and asset base along the way. It’s not too aggressive and gives you the chance to build your business in a sensible manner.

The Poolwerx franchise gives you flexibility with this plan. You are not forced to go with the above plan. They will fit the plan to you. This means there will be franchisees who will be happy enough just staying with one van.

I't’s important to find the franchise model which best suits your skill set and ambitions.

Areas to check:

• The obvious downside of a pool business is the seasonality, so you need to clarify what happens over winter?

• What does Poolwerx suggest you do during the quiet months?

• Territory size, are there limits to your growth, or can you keep expanding?

• Training, what’s covered, how long is it, is it on site or on line?

• Ongoing skills development for the franchisees. Retail requires a different set of skills to the ‘man in a van’, so how is that dealt with?

• What ongoing support is provided?

• What’s included in the total costs?

And of course, have the numbers checked out before you commit buy with a Pre-purchase Review. This is one of the most important elements of your due diligence. You need to be sure the numbers stack up. You will be making a significant investment so you want to be sure of the financial position.

Let me know if you need a hand.

Peter