How to Take Back Control of Your Business
The 5 Biggest Mistakes You’re Making With Your Numbers
You’re busy running your business and doing all the things. But – do you know where you’re headed? Where will your business be in a year?
The starting point to find out, is your numbers. BUT – before you run screaming in the other direction, I have good news. It doesn’t have to be complicated. In fact, it’s much better to keep it simple.
So, let’s look the top 5 mistakes that small business owners make with their numbers (and what to do about them):
1. Ignoring them
Looking at the sea of numbers in your business can be overwhelming – it can feel too difficult to work out what’s going on.
The answer is to find a simple system that works for you – one where you can see the crucial pieces of information, without drowning in every single number that is moving in or out of your business. Pick just a few critical things that to measure.
Let’s start with one of the key figures that you definitely need to know – how much you earn per hour, for each of your services.
When you first work this out, it can be eye-opening (and sometimes tear-inducing). But you need to know that all those hours of work are worth it. And if you don’t like the answer, at least you can start to do something about it (see number 4).
2. Handing all your numbers over to your accountant, and forgetting about them
I love accountants (I used to be one). And getting a professional to sort out your year-end accounts is a great idea.
But…that can’t be the only thing you do with your numbers. For a start, those numbers happened months ago. They aren’t telling you much about what’s going on now – never mind what may happen in the future.
So, you need to be looking at what is happening now, and what you expect to be happening in the next few months. People call this forecasting, planning or projections. But it doesn’t have to be fancy. If you know how much you earn from each service that you offer (we already talked about that in number 1) – you just need to work out how many you’re planning to sell.
If that doesn’t give you the answer you were hoping for, then something needs to change.
Don’t just ignore it. That definitely won’t help.
Which leads me on to:
3. Assuming there’s nothing you can do about them
I want you to make friends with your numbers.
Not all of them – not all the tiny bits and bobs floating around your accounts. But a few crucial numbers that are key to unlocking the future that you want.
You have goals, don’t you? Things you’d love to do, if you brought in enough money (or brought in the same money but didn’t have to work ALL the hours to get it).
The future isn’t written yet. Just because your numbers aren’t looking as rosy as you’d like right now, doesn’t mean you can’t do something about it. You don’t have to settle for the way things are.
When you learn to love just a few of your numbers, you’ll see that even if you don’t like what they’re telling you – they’re very useful to have. Because then you can do something about it. Like this:
4. Not knowing which levers to pull
You can use your numbers to make decisions. Good decisions. Ones that will make you more money.
By looking at just your profit per hour figures, you can start to manipulate the results of your business.
For example, if you aren’t happy with the amount you earn per hour, ask yourself some questions:
- What am I going to stop?
- What am I only going to do if I increase my prices?
- Is there a stand-out service that makes you the best return for your time? Could you focus more of your time and energy on that, if you ditched some of the others?
- Where can you reduce the hours you spend on delivering a service?
- What new ideas do you have? Will they earn you a better profit per hour?
5. Paying yourself is an after-thought
You deserve to be paid. You shouldn’t be last on the list. If you’re being pro-active and looking ahead, you can plan in how much you want to pay yourself.
So, don’t hide from your numbers – use them to make your business more profitable.
If you would like some help making your numbers work for you, then my Business Strategy Pitstop programme could be for you. You will get my eyes on your individual business, using my experience and knowledge to work out how to increase your profits, and achieve your goals.
How in control of your business are you?
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