What percentage of your firm’s revenue is spent on operations?
This question, while seemingly simple, can be difficult to answer. Most firms have a large number of different types of expenses that impact their bottom line.
For example, you may not know how much revenue was spent on acquiring new clients or marketing products last year. But the good news is that it doesn’t matter! In this blog post, we will discuss important questions you should ask yourself when determining what percentage of your firm’s revenue goes to operating costs and why knowing this information could help in making future decisions about your business.
The following questions are designed to help you identify how much of your firm’s revenue goes toward operations.
What percentage of your company’s revenues does the sales and marketing department account for?
A large amount may indicate that more money should be spent on this function while a lower figure could mean other areas need to be explored first.
How many employees work in your accounting or finance department?
If there is only one accountant then it makes sense why these expenses might make up a substantial portion of firm profits, as they likely handle all production-related financial expenditures; however, if the number hovers around five without any significant improvements over time then you will want to investigate what can be done about this situation.