To run a successful business, you’ve got to know your numbers and track them on a routine basis. Doing so helps to manage trends in your business and helps you to know on a regular basis, if you are on track to your goals and what, if anything needs to be adjusted or changed.
Here is a list of numbers you should be tracking;
Income vs Profit
The company gross income less expenses, taxes, etc. will help to define your profit. Managing your expenses will model your company’s profitability. Clearly defined systems also play a big role is finding profit within your numbers.
Labor Costs vs Projected Labor
Labor costs are one of the most demanding on your cash flow and company budget. Hiring right and implementing a good training and development plan will help to keep labor under control. This should be monitored weekly vs sale projections.
Fixed and Variable Costs
Fixed costs are your rent, a lease agreement, salaries, insurance, dues, and subscriptions. Although you cannot change this day by day, month by month, at the end of the agreement you can negotiate new terms of payment
Variable costs are most everything else; such as, but not limited to supplies, postage, office equipment, technology services and support, auto or truck and fuel expenses, food and entertainment, marketing, utilities, hourly pay including, non-billable hours, etc. These are the expenses that can have the greatest impact on your cash flow and overall financial health and generally speaking can your biggest financial challenge, because they are fluid on a daily basis. Creating a spending limit can create greater control.
How you use and manage credit is important to the overall success of your business. Manage your credit/debts and cash flow as closely as you manage your own personal finances. Check out www.freeannualcreditreport.com.
What is your pricing model? Is it competitive? What is your hourly rate within your model? What value do you provide for the price you are charging? Avoid a pricing war, but if you reduce your price then you must also reduce the services/value you provide.
Sales Goals vs Sales Average
Establish sales goals as a company then break down your goals by sales person. Track their progress weekly. Note their tenure and talents play a big role in their success. You should have a development plan for each member of your sales team.
Activity Rate vs. Response Rate
Do you know how many prospects you need to see to generate a pipeline of sales opportunity? Do you know how many sales you need to have each month to achieve your goals? Do you know the average sale per customer? This trend is crucial and you must respond quickly if there is a consistent negative trend.
Sales Growth Strategy
Define the volume you will need to achieve to facilitate growth within your business. When will you hire? When will you relocate? When will you expand your team? Knowing these numbers will help you to make decisions as you grow and not miss a timely opportunity.
Business equity is the value of your business in the eyes of the industry and the consumer as a whole. If your industry, customer and community finds strong value in your brand then your brand/business has more weight and your equity value will rise. If the business is not highly regarded then your business equity is less. Sales and systems are tightly woven into the value and equity of any business.
You may not be a numbers person, but remember this - It’s not what you make it’s what you get to keep that matters most. The overlying goal is to equity by creating profitability and you must achieve it every week, every month, every year. In business, there is little else more important than knowing your numbers when it comes to business success.
For more information about knowing your numbers and tracking your business success to become a more effective entrepreneur contact Sandra Price at Wise Chick Network at sandra@WiseChickNetwork.com or by calling direct at (630)394-4084.
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