How to Understand Your Business's Numbers

This is an excerpt from small business school. Hattie: Bob Orenstein is founder of International Wine Accessories. Bob Orenstein: The ratio is we look at basically gross margins. We look at the percentage of Gross Dallas it falls to the bottom line. We’d like to keep it well about 10 % and of course we struggle to try to push it to 20% and most business are lucky if they can get four or five or six or seven percent. We try to keep it a lot higher if it will pass it. Female: I am a manager here at. Hattie: At hotdog on a stick, everybody knows the numbers. Female: And I put on my cheese run on the rib. Make sure salads are you know up flavors down and all that. Hattie: Sales are up and labors down. What is this and why do you have to post it on the back of the little board. Female: Basically, this is something that we felt. We use these occupations each week when we fill in out our payroll and our weekly pocket and we use the labor percentage to find out how many training we’re sending, spending on each individual employed to have us working here. And then what we do is we calculate our average pay times how many labor hours we had for that week and then we divide it by ourselves for that week and then we’ll get a labor for sending it which the tells the office how much money we’re spending on a laborer. Bob Orenstein: The ground is down stage. Hattie: At the outer colliding, owners David and Janet Milly watched keen numbers closely. There are there numbers that you look out daily or weekly that you built. Wow, we’re doing great. Janet Milly: Well we do flash reports and we all go over this numbers and— Hattie: What’s a flash report? Janet Milly: This is a report that tells David everything he needs to know about residual to payables, new customers, our sales from last week. David Milly: I don’t take risks. I take little bit of the chances that my odds are stacked on my favor before I go borrow that half a million dollar. I know that even if the deal I'm putting together fails, I've got enough left over. I've got plenty of time to bail it out and put something else together, so it’s not, I don’t feel like we’re taking a high risk.