Working the Numbers to Understand the business

Knowing your business numbers

As business owners it is very important to know what is needed to drive your business to be successful. Let’s take a moment to examine your business. Are you aware of your next product launch? What about the date you will begin offering that new service? I’m sure you are able to answer the previous questions but can you answer the most important questions below?
Do you know your last month’s gross profit or your largest expense amount? What about your Projected Sales target for the year and how close are you to reaching that target?
Most business owners are unable to answer these questions and because of that they are cutting their chance of reaching maximum success. To ensure that you reach maximum success in your business you must have a reliable record keeping system in place.
Having a reliable record keeping system is about knowing, controlling and monitoring your financial numbers consistently. Quick detection of money issues in your business places you in a positive position to correct them early which can prevent business failure.
Follow the simple steps below to implement a reliable record keeping system.

1. At the end of each business week create an excel spreadsheet to list your sales and expenses.
2. At the end of each month total your sales and expenses for the month.
3. Subtract your sales total from your expenses total to determine your profit or loss for that month.
4. Compare side by side the current month numbers against the previous months.
5. Now use those numbers to determine the next best steps to reaching your Projected Yearly Sales.

By comparing the months to each other you are able to clearly understand the flow of you business. For example you can determine when your high revenue months are against your slow revenue months. You can then determine what marketing strategies or economy changes occurred during your high revenue months and other important information regarding you business.
The benefit of knowing your numbers will enable you to make wise business decisions and if used correctly it can propel you a step ahead of the competition. Your numbers helps you to understand the health of your business and understanding the true health of your business will lead to maximum success.
Leave a comment below and let us know what are some other benefits that come with knowing and understanding your business number.
For more information on how to keep better books for your business click here.