It’s no secret that every small business needs to track its metrics in order to stay afloat. But for liquor stores, it can be a little more difficult to determine which numbers are important to pay attention to. In this article, we will outline six essential metrics that every liquor store should track. If you don’t already have a solid business plan in place, you should use this business plan for a liquor store to get yourself up to speed.
- Gross Profit Margin
The gross profit margin is a financial ratio that calculates the percentage of revenue that exceeds the cost of goods sold. This metric is used to measure a company’s profitability and is often expressed as a percentage.
Revenue is the total amount of money that a company brings in through its sales and other activities. This figure is also sometimes referred to as “sales” or “top line.”
- Cost of Goods Sold
The cost of goods sold (COGS) is the direct costs associated with the production of a good or service. This amount includes the cost of the materials used in production, as well as the labor expenses incurred to create the product. For a liquor store, the COGS is the cost of the wine and spirits sold.
- Operating Expenses
Operating expenses are all of the costs that a business incurs while running its day-to-day operations. These expenses include rent, utilities, payroll, and other necessary costs required to keep the business running.
- Net Income
Net income is a company’s total earnings (or profit) after all expenses have been deducted from revenue. This figure is also sometimes referred to as the “bottom line.”
- Cash Flow
Cash flow is the movement of money in and out of a business. This metric is used to measure a company’s financial health and can be either positive or negative. Positive cash flow indicates that more money is coming into the business than is going out, while negative cash flow indicates the opposite.
By now it should be clear just how important it is to understand and track the key financial figures that measure your liquor store’s profitability and financial health. By understanding these metrics you will be better equipped to make informed decisions about your business.