Net income is an important business metric because it represents the money left over that you can distribute to shareholders, invest back into the business, or save for future use.Net income helps determine:Whether your business appeals to investors. Investors look at a company's net income when deciding whether to invest in the company. A company with a history of consistent net income is appealing to investors because they know they're more likely to receive a return on their investment.
Whether you can get a small business loan. Banks and other lenders look at a company's net income when deciding whether they should approve a business loan or line of credit. Lenders are more willing to extend credit to companies with high net income because the company is more likely to pay the loan back.
Whether your business is sustainable. Many small businesses generate net losses initially. But eventually, your business will need to generate revenues and control expenses to survive in the long term. Tracking your net income can help you understand whether you're charging enough for your products and services to cover the costs of running the business.