I would love to know how many businesses know their numbers. I don’t just mean the financials of your businesses but also the numbers relating to sales and orders as well. It constantly amazes me how many businesses bump along from month to month not knowing how much profit they have made or if they have made any at all. So many don’t know their conversation rates from enquiries to sales, or how many sales they have made a week or a month. How can you run a business without knowing the numbers?
The FSB put out a statistic some time ago saying that 88% of all businesses have no idea where they stand financially at any moment in time. That means that only 12 out of every 100 businesses know the financial state of their business. With 4.5 million SME’s in the UK, nearly 4 million do not have a clue. As Bill Gates says in the quote above “Knowing your numbers is a fundamental precept of business”. If we don’t understand the financials, then we need to employ a Bookkeeper or Accountant who can not only look after the financial side of our business but educate us at the same time. We don’t need to know how to be a bookkeeper but we do need to know enough to know where our business stands financially at any time. Failure to do this will result in us making really bad financial decisions and spending money we think we have but we don’t. It can also result in us going out of business and potentially losing our income totally and maybe even our relationship. So for the sake of our business and our personal lives, we need to get a grip of it.
So what is meant by the “Numbers” other than the financial numbers? How many of us keep track of where our sales are coming from, what aspects of our marketing is working or not working. What are our conversion rates from enquiries right through to the sale. Without knowing these numbers we are constantly batting in the dark. We might have the mentality that so long as more money is coming in than is going out, we must be doing ok. That may be so, but how much better could we be doing if we knew what worked and what didn’t? If we knew what was working and what wasn’t, with a bit of greater understanding and tracking, it may mean we could have a day off a week to play golf or spend time with our families. What is important to us as business owners?
It may be that we don’t want a bigger business, but how about having a better business? Having a better business that tracks the successes would also mean we have a more viable business should we wish to sell it some day.
No one expects any business owner to know everything but we have to understand what we are good at and what we are not good at. We need to get help for the areas we are not good at and look at this help as an investment in our business. Having a bookkeeper who can do the day to day financials of our business and help us to understand will be invaluable. Having someone who can help us increase sales without increasing spend is also invaluable. When it comes to sales, we need to understand who our target market is and we need to be promoting our business where these people go. Shouting our message through a megaphone to the wrong people will only frustrate us and achieve nothing. Its important to get this right, and the earlier in our business life we get this right, the better for all concerned.
I have run a successful business since 1987 and took this business from concept to sale in 2016. I understood the numbers, it got me through 3 recessions, and this without doubt helped me sell the business and maximise the sale price. I can help you.
email@example.com Phone 07798 632173
This article was first published on LinkedIn by Richard Knight on 21/07/2020