Many years ago, whilst being groomed to take over the Australia and New Zealand business, my Managing Director and mentor drummed into me the importance of, “Knowing your numbers!”
What she was referring to was the KPIs (Key Performance Indicators) of where the business was at, whenever I was asked. It wasn’t just about being able to answer to Area Office, but more importantly knowing how the business was tracking on a day-to-day, week-to-week and month-to-month basis.
Whilst we had full financial monthly and quarterly reports to prepare and submit, knowing how our sales were tracking in relation to forecast on a daily and weekly basis was essential, in order to react quickly to short-term trends.
As a business owner, it’s imperative that you know how your business is performing from a revenue, expense and profit point of view, at least each month. Waiting until the end of the financial year is too late!
Are your expenses in line with the revenue you’re generating? If not, time to cut back spending (but in the right areas!) or ramp up your sales and generate new business.
Do you have a weekly and monthly sales target? Break down your annual business plan and set goals for each month and week. Use your previous years’ results as a guide, as this should show seasonal sales trends if you’re an established business.
Knowing your numbers and knowing how your business is trending will enable you to make factual based decisions.
One of the phrases I HATE hearing in business is, “I think … bla bla bla”! To which I would respond, “Why don’t YOU KNOW?”
I realise that not everyone is gifted with a ‘numbers brain’, particularly the more creative of us. This is where your accounts person or accountant comes into play - to prepare the numbers for you and present them in a way that is easily understood. Together, work out a system that works for you so you’re always armed with the facts of how your business is performing.