8: What’s your business supposed to do for you?
Getting into your numbers mini-series part 8:
People go into business for diverse reasons. They want to earn a living, make a lot of money, have the satisfaction of building something, extend their influence, enjoy a great lifestyle, and help people with their knowledge and experience. Some things in that list will be more important to you than others, that’s normal. But what every business is supposed to do for the owner, in fact two things:
- act as a springboard to opportunities (it’s not doing this if it’s demanding your focus/time/energy instead of feeding you) and
- it should act as a catcher’s mitt to capitalise on all those opportunities.
What does that mean, exactly? First, it’s supposed to support you so you can go after interesting opportunities. You want to spend vacations volunteering in a third world country? You want to invest in property? Take advantage of your great service and reputation and expand to other locations? Become the leading voice in your industry and multiply your influence and earnings? Your business should provide the means for you to do that. It’s not supposed to be your ball and chain where you’re constantly on call, without the rewards.
Second, the business is set up in a way that doesn’t miss any opportunities that do come your way. This is what shouldn’t be happening:
- You’re offered the chance to buy into a great property but your finances are a bit up and down
- You are invited to a prestigious event that would be fantastic for you but you have to turn it down because you can’t afford to be away for those three days
- A fabulous prospective client or business partner comes along, but you’re a little overwhelmed right now…
You tell yourself there will be other chances, and maybe there will, but why wouldn’t you have taken those ones? If you are finding this is a kind of theme in your business, where:
- you’re not getting back to people because you aren’t in a position to offer the attention they’ll need,
- you know you should fix X and Y but you don’t have time to think about where to even start, and anyway hopefully it will improve on its own,
- you know the trade fairs and conferences that would be great for your business but you can’t spare the time this year,
Then you need to get serious about the finances in your business. Every opportunity you say ‘NO’ to now represents money and other opportunities you won’t have in the future. If you were clear on where your money was coming from and how you could magnify that, and you were no longer having your revenue seep out through the cracks in your business, then you would have a whole new focus and would also enjoy your work so much more!
7: What are business metrics?
Getting into your numbers mini-series part 7:
Metrics are the key pieces of information that may be directly or indirectly related to the number you see in your accounts. So when we look at the metrics of your business, we’re not just looking at financial data as in money spent or received.
Some examples of metrics could include number of customers served each week, percentage of clients who are repeat buyers, profit margins of each product or service on offer, most popular service, etc. The important metrics for your business may be similar to, or they may be completely different to someone else’s business.
We’ll work on the premise of, if you can measure something, then you can track it, and you can improve it. We’ll work together to find the key metrics of your business and work out the best way to measure and track them. By improving the important metrics of your business, we’ll increase your profit, give you more time back and lessen the workload.
Are you looking at the whole picture in your business? Or just one or two metrics? If you’d like to simplify and grow your business, and take home more profit, you need to get into these numbers! Email rhoda@rhodagold.com for your free consultation.
Read the next in the series: 8. What’s your business supposed to do for you?
6: Talking about ‘Numbers’…?
Getting into your numbers mini-series part 6:
For clarity, I’m not talking about brushing up on your bookkeeping skills and writing an immaculate ledger of your income and expenses, useful as that can be. This is an in-depth look at the relevant metrics of your business, in order to cut out the time-zappers and have you working on things you:
- enjoy,
- are good at, and
- make you the best money.
We’ll find the leaks in your business (I have never seen a business without any) and then we’ll work out how best to plug them so you’re no longer losing that money. You’ll have all the information on the performance of different parts of your business so you can make empowered decisions around what to focus on every day, knowing that you are track to have a more profitable year.
Are you looking at the whole picture in your business? If you’d like to simplify and grow your business in a smart way, and take home more profit, you need to get into your numbers! Email rhoda@rhodagold.com for your free consultation.
Read the next in the series: 7. What are business metrics
5: The rewards of knowing your financial goals
Getting into your numbers mini-series part 5:
A Visionary had a strong business and his next benchmark was to break £1MM net profit. We made our analysis, and given his margins and the particular strengths of the business, decided together on the best markets to go after. From there we made a plan of action, finding the big wins and setting up targets in order to reach the desired profit.
Another benefit is that because this client was focused on the number he wanted to see on the bottom line at the end of the year, and he knew the most efficient path to get there, he wasn’t distracted by anything that was going to take his time or attention away from reaching this aim. Knowing the numbers brought a clarity and focus that he hadn’t previously enjoyed in his business. It also meant he didn’t need to stress about whether he was doing ‘enough’ – he knew what he had to do, and at the end of the day, could go home happy in the knowledge that all was well, he was on track for a great year.
Are you looking at the whole picture in your business? Or are you more like the big bird with its head in the sand? If you’d like to simplify and grow your business, and take home more profit, you need to get into these numbers! Email rhoda@rhodagold.com for your free consultation.
Read the next in this min-series: 6. Talking about Numbers…
4: Where is the profit in my business?
Getting into your numbers mini-series part 4:
A business owner whose business had been running for a few years but wasn’t yet profitable, wanted to know how long before she could expect a profit, and whether she could accelerate the process. I used projections to show when she would be making a profit, and the analysis also clearly showed where the big wins were in her business. By focusing on these, she was able to surpass the projected figures and soon make good money in her business.
Do you know where the best profit is in your business? If you’d like to simplify and grow your business in a smart way, and take home more profit, you need to get into these numbers! Email rhoda@rhodagold.com for your free consultation.
Read the next in this mini-series: 5. The rewards of knowing your financial goals
3: The price of unexamined success
Getting into your numbers mini-series part 3:
Another Visionary had a particularly good year and didn’t really mind about why – he was happy to take it while it was going and he just assumed he must be doing something right, and that would surely continue. Big shock the following year when he didn’t do so well. But he had no idea what he’d done wrong. Because in the good year he didn’t actually know what he had done right. Success, unexamined, is impossible to intentionally replicate. He left his profits to chance, and on this occasion, he lost out.
Are you looking at the whole picture in your business? If you’d like to simplify and grow your business, and take home more profit, you need to get into your numbers! Email rhoda@rhodagold.com for your free consultation.
Read the next in the mini-series: 4. Where is the profit in my business?
2: It’s not enough to look at the bottom line (profit) either
Getting into your numbers mini-series part 2:
A Visionary who was great at onboarding clients, didn’t really worry when he lost a few small accounts. He knew he could easily get new ones. It wasn’t until a big client left that he thought to count up the value of small clients he had lost that year – it came to $500,000! Clearly there was a big leak in this business – why were all those clients leaving? Good overall revenue hid the leak until he looked more closely at the figures. But with the leak in the business, then next year he might have lost another $500,000, or he might have lost $2MM. Without being on top of what’s happening in the business, he has no control whatsoever over whether he was losing or earning money at any point in time. He was playing with some important numbers but leaving his revenue and profit to chance.
Are you looking at the whole picture in your business? Or just one or two metrics? If you’d like to simplify and grow your business, and take home more profit, you need to get into these numbers! Email rhoda@rhodagold.com for your free consultation.
Read the next in the mini-series: 3. The price of unexamined success
1: It’s not enough to look at the top line (revenue)
Getting into your numbers mini-series part 1:
1: IT’S NOT ENOUGH TO LOOK AT THE TOP LINE (REVENUE)
A growing business was showing doubled revenue over the course of five years. This was fantastic. Sales were at an all time high and there was more demand than ever. (His top line graph looked like the one below.)
But the business owner was stressed, feeling very overworked, and didn’t seem to have much more money in his pocket than in previous years. And for all his sales success, he definitely didn’t have any extra time.
Since his revenue was steadily climbing, he thought he really had no cause for complaint. But his own gut feeling was that for all the work he was doing, he really shouldn’t be this stressed, and he should feel more affluent than he did.
He told me about his business and the challenges he was facing and that gave me an idea where in the data to start looking to find the root of the problem. Happily, we found it, and we also found a number of possible solutions.
On analysis of the business numbers, we found that some of the services he offered were actually losing money. In fact, he would have made more money if he hadn’t even offered those services, and he would have saved himself hours of hard work every week.
Now, since we had all the information, we were able to look at why certain services were unprofitable, and he could make an empowered decision over how to create more money, more time and reduce stress – either by adjusting his efforts and making all the services profitable, or dropping them and focusing on the profitable services.
*****
Are you looking at the whole picture in your business? Or just one or two metrics? If you’d like to simplify and grow your business, and take home more profit, you need to get into these numbers! Message Rhoda Gold now to set up your free consultation.
Read the next in the mini-series: 2. It’s not enough to look at your bottom line (profit) either
Seven things your financial data will show you about your business
Financial accounts show much, much more than how much you made this year vs last year, what you own and owe, and how much tax you’ll have to pay. Did you know that your financial data are also telling you a story? A look into your business numbers, where the art and science of finances unite, can illuminate all kinds of intel about your business.
Intel that can make all the difference between just getting by in business (or even doing well), and having a thriving business that fully supports your goals. When you aren’t fully utilising this strategic financial perspective, you just don’t know what you’re leaving on the table (though you may have a niggling doubt about it that you’ve been pushing to the back of your mind).
Your business needs to do two things for you:
- act as a springboard to opportunities (it’s not doing this if it’s demanding your focus/time/energy instead of feeding you); and
- it should act as a catcher’s mitt to capitalise on all those opportunities.
Let’s be clear.
I’m not talking about improving your bookkeeping skills or learning accounting for your own business, useful as those may be. This is about looking at important trends in your finances, combined with your business’ key metrics, to find out how you can have your business working for YOU.
An analysis of your business data will turn your numbers into a meaningful story of your company’s overall condition and illuminate the potential areas for improvement. So that your efforts aren’t falling through the cracks.
Here are seven things your business data are trying to tell you:
1. How your business could be simpler
- Where to best spend your time for most profit and enjoyability, stop wearing all the hats, reduce your outgoings, improve cash flow, go straight to running the kind of business you really want
2. How your business could be more profitable
- increase your revenue, find and stop the money leaks, know where your best revenue is coming from, reduce the time you spend in your business, make sure more of your revenue gets to your bottom line
3. Discover which data are important to help you grow
- bring your business to scale in a smart way, know the important trends to look out for in your P&L, know if your business is becoming more, or less, efficient over time, take on more help without losing profitability, where to spend more money in your business
4. Reach your personal goals
- pay yourself a consistent salary, know how much to take out for savings, investments and lifestyle, build a machine that works for YOU
5. Help with cash planning
- taking the stress out of paying bills, making purchases, hiring contractors, doing maintenance, and investing in professional development
6. Check against your assumptions about your business
- where is the value in your business, who are your best clients, which activities will give you the biggest return on investment of time, money and energy
7. Clarity in decision making
- show the projected outcomes of possible options and help you make empowered decisions about where to spend your valuable time and resources, find the fastest path to your goal