MYB120: Turnover is Vanity: The Real Financial Numbers You Need to Track

In this episode of the Max Your Business Podcast, hosts Ben Fewtrell and David Carlin dive into the financial metrics that actually matter. While many business owners focus on turnover or the current bank balance, those numbers alone can often be misleading. 

Ben and David explain why "turnover is vanity, profit is sanity" and unpack the specific KPIs that give you true visibility over your business. From understanding your break-even point to managing the "cash gap," this episode covers the essential data you need to stop playing "darts in the dark" and start making educated decisions. 

If you want to move from just operating a business to truly running one, you need to know your numbers. 

Episode Highlights:  

00:00 – Welcome to the Max Your Business Podcast  

03:41 – The "darts in the dark" analogy: why you need visibility  

07:47 – Turnover is vanity, profit is sanity  

08:50 – The three levers you can pull to increase net profit 

 17:33 – Why Gross Margin is one of the most important numbers to track  

18:43 – Understanding your Break Even point (and why it’s exciting)  

22:42 – Profit is theory, cash is reality: The Cash Gap explained  

33:30 – Measuring conversion rates beyond just the sale  

37:25 – The invisible numbers: calculating the cost of doing nothing  

40:20 – Why measuring capacity is crucial for growth  

44:40 – Your Next Steps 

 

Key Takeaways: 

•  Visibility is Key: Running a business without knowing your numbers is like playing darts in the dark. You need data to make informed decisions. 

• Turnover vs Profit: High turnover doesn't mean a healthy business. Focus on what is left over, not just what comes in. 

• The Three Levers: To increase net profit, you can only really do three things: increase sales, increase gross margin, or reduce expenses. 

• Know Your Break Even: This isn't just about covering costs. It is the point where every dollar earned afterwards contributes directly to your bottom line. 

• Mind the Cash Gap: Profit appears on a P&L, but cash is what pays the bills. A cash flow forecast is essential to ensure you don't run out of money while waiting to get paid. 

• Operator vs Owner: An operator works in the business. An owner runs the business by looking at the numbers and making strategic adjustments. 

🚀 Get your free KPI download with 63 examples at maxmyprofit.com.au/kpi and start measuring what matters. 

Tune in to learn which numbers you should be tracking. Don't miss this episode, and don't forget to subscribe for more practical insights every week.