Your Business Numbers Matter
You’ve got your mind firmly fixed on growing your business. New products, new services, new markets… Busy working out the best strategy to take it forward.
Knowing where you want to get to, having a clear vision for the next stage of your business is hugely important. Before thinking about the strategy, though, remember to have your bases covered first.
A few weeks ago, I had a chat with an owner of a new start-up. They had ambitious, exciting plans for growth but… When I asked them how profitable their business was, they couldn’t give me an answer. Why? They knew their most recent turnover figures but didn’t really know how much their operating costs were, not even approximately.
Now, this is where a business can potentially get into deep trouble. If you don’t know your operating costs, how can you tell whether you’re making a profit or not? How much do you need to sell to cover your fixed cost base? Surely, it can’t be a sensible idea to wait until the end of the tax year to find out where you stand? It may be way too late by then…
Why are those numbers important?
Knowing your business numbers is crucial for making decisions. Without that, it’s very difficult to know which of your products or services are profitable and therefore what your optimum product/service mix should look like. Unfortunately, sometimes you may think you know the answers but when looking at the operating cost structure and the revenue figures in detail, you can discover that things are not quite what you thought they were… Without understanding your business numbers, you don’t know where you stand, let alone in what direction you’re heading!
Keeping at arm’s length from your numbers is not the best approach – pay attention to them, understand them, manage them. This will help you make better decisions and therefore create a solid financial foundation for growth. Only with that sorted, you can focus on your strategy.
Not quite sure whether your business numbers support your plans for growth? A Strategic Business Review with me will make things clear and help you regain a sense of direction. Send me a message using a ‘Contact Me‘ form if you’d like to find out more.