Entrepreneurship: The numbers you need to know to grow your business upon browsing around for this installment, I realized that numbers are an issue with entrepreneurs. On top of all the challenges which they face, cashflow management tops the list. And, because it does, I decided to dedicate this whole article to solving this problem. It’s quite simple, there are just numbers you need to know for your business to grow. I will show you, later on, the reason why these numbers are all centered on your cash flow. This is indeed a serious subject, as such, give as much attention to these business tips for entrepreneurs. All business owners need to know numbers. This is good as it helps you achieve life, and business goals. Business goals could be expansion, high profits, and growing your client base, etc. What do I mean by, ‘to know numbers?’ Well, the numbers are only the money, like how much is coming in, or out. What comes in is called cash inflow, and what goes out cash outflow. Combining these two leads us to the term ‘cash flow,’ even if you buy and sell on credit sometimes. To know your numbers also means your sales and conversion rate. It means how much you spend on your phone bills, marketing budget, and travel expenses. Everything in businesses into another. It ties into your taxes, it ties into your bookkeeping, and it ties into your marketing. Entrepreneurs always miss this vital point and end up treating events separately. When this happens, the result is a crushing defeat on all ends. Now, the most important thing, considering the above paragraph, is you need accounting to put these numbers in order. Accounting helps sort all these sales, and costs into a comprehensive statement. Once we mention a comprehensive statement, we go back to the issue of managing cash flows. And, how does one manage to show his cash flows in, and out of his business? Well, the answer is simply in knowing the numbers. When you know the numbers, you manage how much you spend very well. You can’t blow all
your money into marketing if you know that the amount you have in your account cannot cover for such a marketing budget, and employees’ remunerations at the same time. So, which numbers are the most important? The first number to know is how much money are you bringing in. Money coming in is mostly your sales. We may also expand this to include how much you have in your bank account.Speaking of bank accounts, the business you own has its own account, and this is not yours by all means. I have seen businesses sink because entrepreneurs move around buying with the company’s card as if they own it. Doing so without the knowledge of numbers is tantamount to bringing your business on its knees.So, if you know how much you are bringing in you won’t be reckless to spend beyond your limit. The other important number is; you need to know how many clients you have.Clients are the ones that buy your service, or product. Knowing how many you have, and how much they have been growing over the years assists in your planning.For example, if you want to grow your product line, you first need to know if the client base you have is capable of absorbing the extra products. Otherwise, you would incur losses by producing something that does not have takers. How many types of services, or products you have available for sale is another important number to know? This helps you to estimate how much you are likely to make in the near future. In business, estimations help in planning, especially when it comes to expansion, and acquiring new product lines. So, we spoke of the important numbers to be known by every small business owner. To expand on that, you need to also know where exactly you are as a business. When I say where you are, I mean the exact amount in your account and the exact clients in your customer relationship management (CRM) file. I also mean the exact money in your business account, and the exact sales you make in a single month. I am going to explain to you why you need to know where you are right now:
Where you are right now is your business’ reality, like you got such an amount in your bank account. When you know your reality, you are bound to make informed business decisions. For example, you will not set a target of $1,000 sales from a client base with a ceiling of $700. When you do things this way, you are also able to hold yourself accountable. Setting realistic goals pays by giving back quality to your clients. What do I mean by this? A product developed with enough investment is of high quality than the one that did not get enough inputs. More so, if you pay more attention to your numbers, you would enjoy the most. You would enjoy closing more deals, get more clients in your books, and enjoy more profitability. I know, just saying know your numbers might sound not enough, and thus unattainable. If you are having challenges with the subject, I am inviting you to go through my 15-day numbers challenge.These are; you are going to develop new strategies to be able to grow your business. You will also know how much money is coming in, and how much is going out, and so much more. Moving ahead, your sales are important, don’t just track them using your CRM book. There is just one reason for this, your CRM does not connect the sales that you make to the costs that you incur to make those sales. Track your sales using numbers –the actual money coming in. When done, tie that to your expenses and see if you are being profitable. You must understand that any time you sell a product, or service, there is a cost attached to it. You got to know your numbers so that you break-even. Many small businesses fail because of poor numbers of management. The SBA says 90% of small businesses fail. And, here is the worrying part; 82% of the 90% that fail to do so because of poor financial management. Therefore, I urge you all to take this seriously, and if it is too hard to understand, participate in my numbers challenge
