As you may know, numbers are an important part of what I do with clients. It’s about helping them understand the numbers better, but also analysing the business and really understanding what’s happening through the numbers.
What I’ve done here is put a base case, an example business that has $100 of revenue, $50 of cost of sales and $40 of Overhead Expenses. This gives us a profit of $10. I’m going to show you how a 1% increase in sales plus a 1% increase in price plus a 1% reduction in cost flows through and what the final impact of those small little changes are to this bottom line.
If you look at the difference between that $10 where we started and the $12.41 ending profit, the difference is $2.41 and if you look at that as a comparison to where we started, the 10% profit, that has meant an increase of 24.1%, which is amazing.