# Solving the Small Business Equation [Infographic]

We know in business that A+B doesn’t always equal C. There are hundreds of moving parts you have to manage on a daily basis – inventory, staffing, revenue – and it can be hard to stay focused on what’s truly important.

With this infographic, Direct Capital helps simplify the small business equation and give you the tips you need to narrow your scope.

Full Infographic Text:

Running a small business involves managing many variables. It can be hard to keep track.

It may even leave you asking; What’s most important and why? Where should I focus my efforts?

Below, we help you solve for “X” by simplifying all the numbers and data you look at on a daily basis.

Gross Profit

Revenue (-) cost of goods (=) Gross profit

You don’t want to slip into the red, right?

Pay attention to your gross profit to make sure it’s large enough to cover operational costs and your return.

Cash Flow

Sales and revenue (-) expenses over time (=) Profit and loss

This is often considered a snapshot of your business (yearly, monthly, weekly, etc.) and can help project your future income.

Inventory Control

Of course you always want to have enough product in stock, but what if you suddenly have too much? An unexpected raise in inventory could mean a decline in sales or an over-purchasing of the item. Keep tabs on what you have available so you can always hit your mark.

Revenue Forecasting

[Illustration: Graph]

Sales Trajectory

Price Points

Cost of production (+) “X” percent (=) Cost of product, to make a profit

You need to set specific price points so your products generate revenue. If an item costs you \$10 to purchase and you’re selling it for \$11, you aren’t making money when you consider overhead costs. Fill in the “X%” based off market demand and going rates for that item and make sure your price points are making you a profit.

Marketing Costs

Customer acquisition advertising (+) prospecting (=) Marketing costs

If your latest ad or marketing efforts aren’t working, that’s a waste of money. Determine which efforts work and scrap the ones that don’t. You can speed up sales, or slow them down, based on your marketing – which helps manage budgets and revenue.

Your Solution: Finance with Direct Capital

Direct Capital has been helping small businesses across the country access the capital they need for over 20 years. We are a trusted name in the industry and are backed by some of the most reputable partners in the world. For your lending needs turn to the business that will work with you every step of the way and get you the cash you need when you need it. We know you’re busy, so let us handle everything.

Speak to a consultant: 866-777-0117

Alex Haberland is the Customer Retention Marketing Manager at Direct Capital. While she considers herself to be a self-professed cat lady and a Maroon 5 aficionado, she finds passion in her writing and in marketing. To connect, follow her on twitter at @Alexandraaalee. And if you have a topic you'd like to see covered on the Direct Capital blog, shoot her an email: amyers@directcapital.com.

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