Know Your Numbers to Grow Your Business
If you want to grow your business, you need to know your numbers! There is absolutely no way around it. But speaking to entrepreneurs every day, I know that most people don’t really want to acknowledge this. Mainly because there is a misconception that it is not ALL about the numbers.
Why changing your perception in numbers is the first step
But take this comparison to better understand the importance:
If someone is dancing as a hobby, it is mainly about the fun. It is about moving your body. It is about passion and having a good time. You practice for yourself and with friends. It is your hobby!
Once someone decides to take this hobby to the next level and starts dancing in competitions, things are changing. You train more often, harder and you start measuring how you are doing. As things start to get serious, you will get a trainer to show you want you have to be better at. This trainer will analyze everything you do: Your nutrition, cardio workout, rest phases and all the components that make you a champion.
It is the same in business!
Know your numbers to make all the difference.
If you want your business to be professional and not just a hobby, you need to change the approach. You can’t improve and manage something that you don’t measure. At any moment in time, you need to see how your business is performing.
- How are your clients reacting to your products?
- Is your marketing effective and your money well invested?
- Are you allocating your time to the right things?
On the one hand, it is important that you know where you need to improve in general and in which areas you may need support. Measure how everything works and implement changes as fast as possible if something is not working. This will save you a lot of money and increase your growth significantly.
On the other hand, knowing your numbers will help you to manage the daily business. Your KPIs uncover trends as your performance changes. This allows you to navigate your business in the right direction.
Three KPIs you should always know
There are many numbers in your business that you should be monitoring. But three of them are essential to know for every entrepreneur.
The awareness of when your money goes in and out of your business is essential. The number one reason why businesses fail is because they run out of cash! You can have the largest orders in the word, but if you cannot bridge the time until the money comes in to pay yourself and any other bills you need to pay, you are broke before you started. Thus, the cashflow projects when money flows in and out. You need to know what is in your bank account at any moment in time! And also, which upcoming invoices get due and need to be covered.
Your net profit
The net profit is the difference between everything you earn and everything you have to pay. This measure gives you guidance on how profitable you are and whether your business can sustain in the long run. Only when you generate profits and put some reserves aside, you can survive economic downturns and times of crisis. But if you charge too little or your expenses are too high, your business cannot sustain in the long run.
Your Revenue over time
Business growth comes down to earning more money. This sounds tough but let’s face it: If you cannot pay your suppliers, your staff or even yourself, there is no business. Thus, you need to know how well you are performing. If your revenues don’t grow over time, you need to start managing your business differently. When did you launch your last product? Are you doing enough efforts in marketing and sales? Do you monetize your relationships the best you can? This and many more topics can be investigated once you realize that your revenue is down.
It is 100% possible to manage your business by the numbers – but to do so, you need to know your numbers. Your numbers tell you everything about your business that you need to know. The good, the bad and the ugly truth. Numbers don’t lie.
You are not just missing out on potential, but you risk shooting in the dark. If you have this awareness you can start growing your business by design. This does not just make it easier but also more sustainable.
If you want to learn more about how to manage your business by the numbers, you can find ore information about the show “Success By The Numbers” by our CEO Mona Tenjo here.
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