Quick, answer these questions about your own business:
Are you making money? Losing money? Maintaining money? Where are you today? Where were you last week? Last month? Last year at this same time? Might you be able to do less work and make more money?
One of the first things I ask any consulting client is, “What are your numbers? Do you know where you are right now?” Many do not.
I read a statistic that 80% of small businesses do not keep month-to-month profit and loss statements, and if they do, they never take the time to look at them. I’ve seen companies get nervous that their sales are down, and get in the habit of running ‘flash sales’ more often than they should. By the time they look at the commissions they paid, plus all of the other costs associated with it, like the cost of goods and shipping, they sometimes realize they barely broke even or actually lost money.
Some companies never take the time to figure this out, and that’s how they find themselves in a reorganization, or worse, a bankruptcy situation.
Over the years, when I have kept up with my monthly profit and loss statements, I have been able to see exactly where my revenue is and what my expenses are. I can make adjustments accordingly. Sometimes you might have more sales and are working harder, but your number of employees has gone up, as well as the cost of goods or additional expenses, and you are actually making less money than you were before...all while working harder.
When you can see exactly where you are, you will know what adjustments are needed; where it's important to put your energy.
An example from my own business is when, after the loss of an employee, I decided to outsource my bookkeeping. I was rarely receiving monthly profit and loss statements. At best, I was getting them every six months, or worse, just at year end.
In the past two years, we’ve moved more toward an online platform of sales and courses. On the surface, it appeared that our sales were doing great, but we were barely paying all the bills month to month. I was very frustrated and started running the report myself. I discovered that, even though the sales were up, my expenses were now exceeding revenue. There was the expense for the ad team, the cost of the ads themselves, the copywriter and all the tools that were needed to run an online operation. I discovered that we would buy one program for $299 a month and were paying $199 a month for a similar product because no one had canceled the first when we went to a new platform.
It was a rude awakening as to where the money was going and explained why profit was down. My decision, once I had that statement in hand was obvious...I needed to bring this back in-house.
I needed to fall in love with my numbers again.
When you know your budget, where your money is going out and coming from, you can adjust your behavior. You can eliminate products or services that you don't need. You can put more effort into the three things that are working instead of working on ten different things, seven of which are draining your finances. Falling in love with my numbers helped me fall in love with my business again. It rekindled the spirit that was there at the beginning.
Your numbers are talking, are you listening?
Communication is key in any relationship. I encourage you to develop a great working relationship with your own numbers. When you do this, you will not only get clarity on where to put your effort, but you will see the growth that follows. It will help you rekindle the joy in your work and allow you to fall in love with your business all over again.
P.S. This is an excerpt from Belinda’s chapter about Falling in Love With Your Numbers in the book, Cracking the Rich Code, vol 5. Get your copy HERE today!
XOXO!
Belinda