The biggest mistake of (almost) every entrepreneur
Every business owner must keep an eye on all areas of his business. Since the financial indicators to sales, production and inventory figures. The problem is that this general view can often make the manager unaware of the true details of his finances. In my opinion, one of the biggest mistakes most business owners make is a cursory look at their finances. If you believe that knowing your income, expenses, and whether you make a profit or a loss is enough, think again. Nowadays it is important to know these 4 indicators in order to make convincing and informed decisions:
1. Financial margin - contribution margin
This is perhaps the most important financial indicator because it will tell the business owner how much of the proceeds from sales after deduction of direct costs carry fixed costs and ultimately make a profit. The process is very simple if your contribution margin is negative; it means that something is wrong; after all, it is impossible to pay the fixed costs with a primary loss. If your contribution margin is positive, you will need other indicators (such as the break-even point) to understand if this margin is sufficient or not.