When you’re in control of your business’s numbers, good things happen.
Primarily because we know how we’ve done, where we are and where we’re going.
Your time spent on this area of your business very quickly translates into
- less stress
- tighter control
- better insights
- improved visibility
- more informed decision making
This all leads to improved profitability
The vast majority of small & medium sized business owners that we have met and engaged over the years had not given nearly enough time to this area. Yet after a few short months of working with them all the above benefits were achieved.
This is not to suggest that understanding your numbers leads to a stress free life – simply a less stressful life.
We have all heard the expression “knowledge is power”, and to a large extent it is. It ultimately, in the context we are discussing, allows us make better decisions based on facts (the actual position and performance) of the business.
Maybe we could, at this stage, pause for thought as we ponder the following few questions;
- What were the total sales reported for the business in the past two years (off the top of your head) compared to the progress we are making in the current year?
- How do we analyse our business into its respective divisions and sub-divisions – do we have an easy reference to understand this?
- What is the overall gross margin of the business?
- What are the component parts of our gross profit?
- What is the Labour to Sales ratio and how do we use this to manage the business?
- What are the total average operating costs of the business?
- What are the sales in the current month compared to the same period last year?
- In fact, what is the gross profit / margin, labour to sales and operating costs compared to same period last year?
And that’s just looking at the performance – otherwise known as the Profit & Loss Account!
So in our coming posts we will look at the position of the business, commonly referred to as the Balance Sheet….
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