2. You know your breakeven point
The success of your business is measured by each fiscal year. Each year your revenue and expenses get reset to zero. When you know your numbers, you'll learn how much you need to make in revenue to meet your financial obligations for that year, also known as your breakeven point. Every sale after that will be for-profit purposes.When you know your numbers, you can identify which activities in the business are driving profits.
For example, suppose your advertising spending is relatively high, but you don't see much value in return. In that case, you identify an issue that must be investigated further to see some cost-saving opportunities.You understand how the numbers are tied directly to the outcome of your business. Knowing your numbers will not only keep you in business for the long term, but it will allow you to make your business more profitable.
The bottom line is that there isn't an activity that doesn't impact your bottom line in business, whether it's directly or indirectly. Every choice you make in your business influences your business's financial potential, either positively or negatively. As a business owner, to be a successful business owner running a profitable business for the long-term, you need to know your numbers.