Only 4% of Australian businesses ever reach $1 million in revenue. Just 0.4% get to $10 million.
That statistic gets quoted a lot, usually as a comment on market conditions or luck. I don’t think it’s either. In my experience working with private and family businesses, the gap between the businesses that make it and the ones that stall almost always comes back to the same thing: financial literacy at the top.
Ask an owner about their product, their people or their customers, and you’ll get a confident, detailed answer. Ask them what return they’re earning on the capital tied up in the business, and the room goes quiet.
The typical CEO versus the ideal CEO
The challenge becomes clear when you compare where the ideal and typical CEO spend their time. The ideal CEO splits their attention four ways — strategic direction, operational effectiveness, leading people and financial literacy. The typical CEO’s chart is dominated by operations, with financial literacy squeezed into a sliver at the edge.
That imbalance isn’t laziness. It’s the natural pull of a business that needs running today. But it means the numbers only get looked at once a year, after the fact, in a set of accounts prepared for the tax office rather than for decision-making.
The cost of that is real. You can grow revenue for years and destroy value the entire time. Plenty of businesses do.
The ten questions
These are the questions I think every owner and director should be able to answer without reaching for a spreadsheet:
- Does your revenue exceed your costs?
The starting line. Is this a business, a hobby or a charity? - How much capital is invested in your business?
Know every dollar of equity and debt working in the operation. - How much of that capital do you own?
Understand your share versus the bank’s. - What return are you getting on the capital invested?
If it’s below what the money could earn elsewhere at lower risk, that’s a finding worth acting on. - Are you creating or destroying value?
Profit and value creation are not the same measure. - How much working capital do you need to run the business?
Debtors, stock and creditors quietly consume more cash than most owners realise. - Are you generating positive or negative free cash flow?
Profit is an opinion. Cash is a fact. - When should — and shouldn’t — you take money out of the business?
Drawings decisions made on gut feel are one of the most common causes of avoidable stress. - What is the limit of your debt relative to the capital invested?
Understand your ceiling before the bank explains it to you. - How can you measure and improve the economic denominator?
The capital base itself is a lever, not a fixed constraint.
Why knowing the answers matters
None of these questions require an accounting degree. They require a habit — a regular, disciplined look at the vital signs of the business, the same way you’d check blood pressure rather than wait for symptoms.
The value in the list isn’t that any single question is revelatory. It’s that together they change the conversation at the board table from “How did we go last month?” to “Is the capital in this business working hard enough, and what will we do about it?”
That’s the conversation that separates the 4% from everyone else
Curious how your business measures up? A MYMAX Financial X-Ray provides a practical scan of your financial vital signs and highlights where you may need to look more closely. Get in touch with the MYMAX team to learn more.
Rob Ashley
Rob Ashley is an experienced business advisor who has spent more than 30 years helping private business owners improve performance, build value and grow with confidence. After building and selling his own advisory practice to PwC, Rob spent 13 years as a Principal with the firm before joining MYMAX.
Today, Rob works with owners to strengthen financial performance, sharpen strategy and create long-term business value.
