Do you want to make more money in your beautiful business? Do you want to be in control of how your business grows?
But – are you burying your head in the sand when it comes to your business numbers?
If you’ve answered yes to all of the above, then you need to keep reading.
Business numbers aka business finances are a measure of your business’s health. It’s about having the right information to make the best decisions for your future. We aren’t just talking about the bookkeeping and the tax return, but the reports, calculations and stats that will show you how your business is doing, how good your systems are working and where you need to change. They’ll show how much profit you make, how good your cashflow is, how good your customers are at paying, what costs you’re overspending on….the list is endless.
I know – the thought of it scares you; it’s that one area that you just don’t feel comfortable with and you’ll always leave it and leave it and leave it. But, what if you leave it too late?
Around 80 per cent of UK companies fail within their first year, according to the Office for National Statistics, only 42.4 per cent of businesses started in 2013 were still trading five years later. This was before the pandemic was even a factor. There are several reasons, but lack of cash and lack of planning are two biggies. This is where your role in understanding your business finances becomes crucial.
You may think that ignorance is bliss, but honestly, you’re doing more damage than you know. Your finances need TLC. Your business may come up against financial problems, just as it will opportunities. But how will you know about them in time? In time before the problems take over, or in time before the opportunities are lost?
What sort of things can you do?
Manage your cash. A cashflow forecast, could predict cash flow shortages well ahead of time, giving you chance to make changes or put plans in place. It will force you to assess the way you get cash into your business and whether you need to put different processes in place.
Or, how about you wanted to see which services make you the most money, a gross profit calculation, split per service, would provide this data, encouraging you to assess where your time is better spent, or where your marketing is of more value.
How else can your finance reporting help you? Let me ask you some more questions (sorry – I love a good question!):
- Do you want to make more profit?
- Do you want to make better business spending decisions?
- Do you want to know what advertising campaigns you should focus on?
- Do you want to assess when you can give yourself a pay-rise?
- Do you want to pay less tax?
OK, I’ll stop there! How many did you say yes to? I’m betting it’s a lot, probably all of them?
When you know your way around your business financials, you can find solutions for all of these. You don’t need to be an accountant or have a maths degree. If you know basic maths, know how to use a calculator, and know your way around a spreadsheet, you’ve got the foundations.
You’ll never be too small to start paying attention to your numbers. I always say it’s far easier to learn with 5 transactions than 5 million! Don’t get me wrong, when you get to 5 million you’ll likely have a team of finance stars helping you, but they’ll need direction from someone – someone who knows the business inside out, someone who understands what works for the business, someone who they can sit down with to discuss the numbers, who understands what they’re saying.
Just for a moment, forget about all the number stuff above. Instead, imagine how powerful you’ll feel with this new knowledge, knowing how much more in control of your business you’ll be. That you could handle whatever was thrown your way. That you could sleep better at night not worrying about the money and tax. That you could confidently have a meeting with your bookkeeper or accountant, not scared to raise a question or a suggestion. It feels good right?
So now you can see the true value of understanding your business finances, are you still going to leave your head in the sand?
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