Sales Ratios are where Sheldon Gates begins his book and for good reason. Nothing happens in a business until a sale is completed. Until that point in time, you are merely spending money, not operating a business.
The first ratio that 101 Business Ratios introduces is the Sales Growth Ratio.
Growth may not always be a good thing for a company, but increasing sales will at some point be necessary in order to build a larger company.
I like to compare Sales Growth to that wall at Grandma’s house that looks somewhat like a ruler until you get up close and notice that each line is associated with a grandchild and a year. Each year, each of the grandchildren back up against the wall and anxiously wait while his or her height is marked so they can step away and see how much he or she has grown and how high he or she is compared to cousin so-and-so at the same age.
Just like the wall at Grandma’s house, Sales Growth is perhaps one of the easiest things to track for a business owner and most business owners do it naturally. Oftentimes ratios are best expressed as a percentage and Sales Growth is one of those ratios best expressed as a percentage. Sales Growth is a Horizontal Comparison.
Make sure you check out the next post for more info on the Sales Growth Ratio and remember…
…Your business THRIVES on a solid FOUNDATION!!!