Know your business numbers

Do you know your business numbers? It’s one of those areas of business that many shy away from, but it’s a crucial element you need to understand, if you want your business to grow and be profitable. 

So why is it so important and what numbers do you need to know? 

Make informed financial decisions

Knowing your business numbers helps you make informed decisions for your business. For starters, how will you know if your business is making money or losing it? If you know your numbers you can decide if you can afford to make investments or hire a mentor.

But knowing your numbers will also help you know if you’re on track with your business and general financial goals. You can see if you need to increase your prices to cover VAT or to better reflect the value you bring to your customers. 

And if you’re at the stage where you are considering getting someone to invest in your business, you’ll have the numbers to back up why they should consider you a great investment.

See where you’re taking risks

When you know your numbers you can look to avoid taking unnecessary risks. 

For example, it’s a good rule to never let a single client be bringing you more than 20% of your overall revenue. If they ever decided to leave, it would have a big impact on your overall income. Knowing what each client is worth to your business will help you make adjustments to rectify this. You could get more clients in and look to earn more, so the risk is lessened.

You may discover that you’re paying out just as much as you have coming into the business. When you know your business numbers you’ll be aware of this and can start cutting costs and upping your income.

The business numbers you need to know

So what numbers should you be looking at? Here’s a brief overview of the numbers in your business you need to know:

• Revenue - how much money is coming into your business?
• Costs - not counting the salary you pay yourself, what other things are you paying for?
• Salary - how much you’re paying yourself. Do you even pay yourself a proper salary? 
• Cash - the money you have available in your bank accounts now. 
• Cost per hour - how much it costs per hour, to run your business (my pricing calculator will help you work this out - you’ll find it here.).
• Profit - what you have left, after you’ve paid for everything.
• Tax - remember to count money for National Insurance too!

Business numbers and finance is an area many business owners shy away from, but it is crucial that you understand your numbers. So take the time to get familiar with them. Educate yourself and start to see them as really useful data that will help you grow your business - because that is exactly what they are!

Whether you’re an established business or a startup, understanding and tracking your business numbers doesn’t always come easy. Spend an hour with me and I will get you on the right track with your pricing and profit. So if you’re looking for expert help on anything pricing or profit-related, why not book in a power hour call!