Five Tips to Knowing Your Numbers

May 24, 2021 | Knowing Your Numbers

One of the conversations that we probably don’t value enough, is the one about knowing your numbers.     

It is super easy to get emotional about how your business is going (or not going) but the truth is that the numbers and the data, does not lie.

Here are 5 tips to guide you on your way to help you to not only know your numbers but understand them as well. 

1.  Budgeting is your friend – set and stick to it:

You will not get it right the first time, but it is a case of setting it, then use it as a guide to do better and try, try and try again.  Get into the habit of knowing your routine and work smarter, not harder.

2.  Your five largest customer’s profit:

Increase the percentage of clients that return your best profits and retain your best customers! One of the cheapest customers to market to is an existing customer, they already know your business, BUT do you know the profit you make from your top 5 customers?

3.  Do you know what your figures are really telling you? Here is a few clues:

The following tips will help you to work out how much it costs you to turn on the lights?

  • Analyse both gross and net profit margin:  Do this to better understand how successful your organization is at generating a high return.
  • Measure cost effectiveness:  Find the best ways to reduce and manage your costs
  • Revenue Vs. Budget Target: This is a comparison between your actual revenue and your projected revenue. Charting and analysing the discrepancies between these two numbers will help you identify how you are performing and help you improve.
  • Cost of Goods Sold: By tallying all production costs for the product/service your company is selling, you can get a better idea of both what your product mark-up should look like and what your actual profit margin is. This is key in determining how to outsell your competition.
  • Expenses Vs. Budget: Compare your actual overhead with your forecasted budget. Understanding where you deviated from your plan can help you create a more effective budget in the future.  

4.  Making small changes:

Having the idea to make changes is one thing, but putting those ideas into place is another.  Break the changes down into manageable tasks. Making small changes, weekly or even monthly will give you progress which eventually will turn into big changes and big results.

5.  Allocate the time: 

So often, I hear,“ I don’t have time!”  Make time – make an appointment with yourself and your figures.  There is a saying that you should spend at least half a day every week “on your business, not in it.”  Allocate one of those half days a month to looking at your facts and figures.  The more time you spend time looking at them, the more you will understand them.  Don’t throw your hands in the air and say it is all gobbledygook.  It is your business, and you are working to make a successful and profitable business, so take the time to understand what you are doing.

Knowledge is power, and no matter if you are start up or a seasoned pro, it’s essential that you MAXIMISE your PROFITS and to do this you need to KNOW YOUR NUMBERS!

After all, that is how you make money!

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