In business, and in your personal life for that matter, bottom-line is, you must know your numbers. However, don’t let numbers be scary or repel you. Even though the mindset that many of us grew up with was “numbers are no fun”, “numbers are hard”, “dry”, “not creative” … whatever the misconception you created about numbers when you were young. But quite the opposite is true. Numbers tell a story, numbers help you forecast (your own personal crystal ball), numbers are creative, and when you get right down to it, numbers make up the universe – think music, chemistry, cooking, dance, architecture, and on and on and on. And the wonderful thing about business math, which is all you need for general commerce, is that it’s really simple, there’s no rocket science here. You just need basic addition, subtraction, multiplication, and division, with fractions, decimals, and percentages thrown in for better measure. Another simple truth about your numbers – if you don’t watch them, testing, measuring, and tracking what they’re telling you, then numbers will do very little to help you succeed. Embrace your numbers, they are your friends!
Maintain these few number tools and you are well on your way to many business successes:
• Basic Testing & Measuring:
1. Number of Leads Generated
2. Conversion Rate of Leads to Buyers
3. Number of Transactions for each Buyer
4. Amount of Average Dollar Sale for each Buyer
5. Profit Margins (both gross and net) on Your Revenue
• Balance Sheet
• Break-even
• Cash Flow
• Income Statement (P&L)
• Marketing Campaigns (always testing & measuring)
Ask any business owner, around the globe, and they will all have stories how, over the years, they’ve spent literally thousands of dollars on ad campaigns, just because that’s what they’d always done (or they saw their competitors doing), when those campaigns were actually costing them money, with no return on investment. Or, those clients who focus their sales efforts on inventory items with the lowest profit margins, while their higher profit items sit languishing on the shelf. And there are business owners who never increase their prices, as business expenses continually creep up year-over-year, so they end up taking less money home at the end of their efforts each year.
There are so many ways money can slip through business owner’s hands. If you just systemize and embrace your numbers, that won’t happen: start tracking and having fun with your numbers today. Call John if you need help systemizing and tracking your numbers. 305.899.9963
