End your fear of numbers – with one financial practical tool at a time! Do you want your business to succeed? 100% yes? Well, the reality is that avoiding your numbers is not an option!
Don’t let finance terminology get the better of you. If you’re in business to make money, you’re probably relying on either your emotions or your intellect. Learn to know, understand and love your numbers to enable you to make informed, intelligent, and strategic business decisions. Your numbers tell a story – know what they are saying so you can make more solid financial decisions.
How to master the numbers of any business?
Not only do you need to know your historic numbers but the ones that will create your future. Due to a lack of information, too many business owners have a limited ability to make decisions. If you want to manage something, you have to measure it! This is both accounting numbers and testing and measuring results.
DO THIS HEALTH CHECK
Financial:
■ Revenue – are my sales increasing?
■ Profits – am I making money?
■ Projected Cash Flow – do I have enough cash in my business?
■ Equity – is my business gaining or losing value?
■ Ratios – What are my Days Sales Outstanding (DSO), Aged Payables, Current Ratio, etc.
Non-financial:
■■ What are my key activity measures/drivers?
■■ Do I have customer service measures?
■■ What are my strategies/values?
Is your Business profitable?
If you believe your business is profitable then you will have these key focus areas in place:
Market Related Salary (MRS)
If you worked for somebody else, you probably had the privilege of earning a consistent monthly salary. At the time you may not have appreciated this as much as you do now, where you may not be earning nearly the same as you did as an employee. You may also have had the privilege of enjoying additional benefits i.e. pension, provident fund, medical benefits, bonuses, travel allowance etc. As a business owner are you enjoying a market related salary plus benefits consistently every month? OR have you sacrificed this privilege for ‘a better quality of life’ – not working for a boss, more flexibility, be your own boss, make your own decisions to mention a few ‘benefits’ as an entrepreneur?
Profit
Over and above your market related salary does your business provide you with a minimum of a 22% net profit? (this must include your market related salary). Many exclude the owner’s remuneration as they are either living out of the business (only pay myself when there is enough available) or not paying the MRS, which is therefore not a true reflection of the actual profit in your business.
Marketing Funnel
Is your marketing funnel flooded with new leads of your ideal target market? OR is it rather dry and may drip a prospect here and there and may not be your ideal target market?
Do you have a lead magnet that automatically attracts your ideal customer/client. Do you know who your ideal target market is?
Do you have a ‘Spray and Pray’ or ‘Bulls Eye’ marketing approach? Do you want market share or wallet share? Do you want quality clients or anyone, no matter whether they make you a profit or not?
Marketing can be your most expensive line item if you do not have a MarketingPLAN and strategy to attract the right market to your business. Ideally you want to market to a potential customer/client by offering a product/service that will give you: The most amount of profit with the least amount of effort in the shortest space of time.
Once you have a predictable flow of these ideal customers/clients then you can look to cross/up sell your other product/service offerings.
Sound Customer/Client Base
In order for your business to be sustainable and ensure the continuity of a profitable business your customer/client base needs to be sound. Does your business rely heavily on a few large customers/ clients who contribute the most turnover into your business? OR do you have a good spread of customers/clients who buy from you so you are not at risk of being negatively impacted should your major client, who you depend on decides to end their relationship with you. Please don’t assume that these same clients who pay you the most are your profitable clients. Many a client I have worked with has realised that their focus was on turnover (vanity) and not profit (sanity).
So, If you suffer from arithmophobia and want to get to know, understand and love your numbers! Contact me. Let’s face your fear and obliterate your phobia for numbers! And if you feel fear or excitement after reading this article then take ACTION and let’s talk.
Contact me on https://linkshare.co.za/marlenepowell or call 083 479 4471