Maybe you’ve been running your small business for a while now and things seem to be going well, however you’re not really sure if you’re making a profit.

How can you tell?  It’s all about margins!

What are Margins?

Profit margins are defined as the “percentage of revenue remaining after all costs have been deducted.”  That means that whatever revenue you have left over after subtracting things like staff costs, rent, marketing and other costs is the “profit margin.”

Choosing the Right Accounting Method

There are two ways to track profit: accrual-based accounting and cash-based accounting.  Whilst cash based accounting is the method most commonly used by small business, accrual based accounting provides you with a clearer understanding of profitability because it matches revenues and costs when they are earned versus when received and paid.

Once you’ve established a system of tracking all your business finances, you can start applying your new knowledge to the way you run and grow your business.

Other Ways to Measure Success

Besides profitability, there are other ways to measure your business success that, when used together with your financial tracking information, can give you an even fuller picture of your success:

  1. High Customer Satisfaction
  2. Growing Business Network
  3. Converting New Leads
  4. Efficiencies via technology

Finding the Right Solutions

If you’re ready to start using financial tools to track your business profit, it’s time to get in touch with us!  At ABJ Business Solutions, we work hard to provide you with all the accounting services your individual business needs so you can track and build your profit margins!