What Do Your Numbers Say?
As a small business owner (SBO), you have a dream. You can see it, you can feel it, and you can taste it. And that is the first step to making it a reality. But then what?
Oh, there is so much, isn’t there? But you can’t do everything all at once. In fact, being an SBO successfully means you have to understand how to set priorities and follow through on them. All those dreams depend on it, don’t they?
“The business is the vehicle to realize your dreams.”
-Marc Allen, Visionary Business
The dreams you have aren’t all centered on your business, are they? You want success in all the areas of your life, but as an SBO, you know that everything comes back to the success you have in your business. That’s a lot of pressure – so, again, set priorities.
I am always amazed by the outcome of Mastermind Group sessions. SBOs come in with all the “stuff they need to get done” and leave with a plan. It’s a plan they are confident in and are eager to implement. And, one of the most amazing outcomes, is that they leave less frazzled. Things get put into perspective and they say they feel they can manage it again. It’s not all marketing and sales solutions. It’s not all process and implementation, either. But there is ALWAYS some conversation about numbers.
Let’s talk about the numbers that go with a successful small business. What are the numbers you need to know? It’s all about finance and money. There are some basics that you need to understand and know where you stand AT ALL TIMES. They create the road map for where you are going and are the basis for the decisions you need to make.
Sales keep the doors open in your business. You need to constantly be actively engaging new customers in addition to servicing existing customers and nurturing prospects. Know what is in the pipeline and keep filling it up.
Cash flow is the actual money coming in and going out of your business. If you run out of cash, the company will cease to operate. Many variables impact cash flow such as sales, collections, and expenses. Maintaining a good cash flow can be a challenge, but it is the lifeblood of your operation.
Profit and Loss
A P&L is the summary of the revenue and expenses in a company over a specific time frame. It will tell you if you made money or (drat) lost money. Evaluating each month will guide your direction and help you make informed decisions. You may “think” things are good, but a profit and loss will illuminate the reality of sales and expenses.
The Balance Sheep is a statement that shows what the business is worth at any point in time. There are three parts to a balance sheet: assets, liabilities and ownership equity or capital. Again, reviewing the balance sheet on a regular basis shows you the direction your company is taking.
Working capital is a measure of a company’s efficiency and overall health. It is the difference between current assets and current liabilities, adding in accounts receivables (what you are owed) and deducting pending liabilities (what you owe others). Monitor this number monthly and you will see the direction your business is heading.
This may all sound very “corporate” and that might be one of the things that drove you to become an SBO on your own. However, knowing your numbers is essential to know not only where you are, but to start building the road to the success you want to achieve.
Most SBOs learn fairly quickly that tools like Quickbooks or Freshbooks are essential to their “knowing their numbers.” With the help of an accountant or bookkeeper, many can maintain their own books. But if that is something you don’t want to do, or can’t get a handle on, it’s too important to just set it aside.
If you really want success and want to build a profitable business, you’ve got to know your numbers, set goals and develop strategies to grow.
Through my years in business and in building Grow Your Business Coaching, I can always provide resources for you to help you get started, maintain your books or, if it’s time to move to the next level, professionals who can help you set that in motion. Let me know if I can help.
To Your Success!
B3 – Be Bold, Brilliant and Boundless!