Do You Know Your Business Numbers_
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DO YOU KNOW YOUR NUMBERS?

DO YOU KNOW YOUR NUMBERS?

How well do YOU know your BUSINESS NUMBERS?

DO YOU KNOW YOUR BUSINESS NUMBERS?

If you have ever watched Dragon’s Den, you may have noticed that many of the prospects fall down on their numbers when pitching to Peter Jones and company.  Those pitching for the Dragon’s money often cannot answer questions about their numbers such as their REVENUE SALES, their GROSS PROFIT MARGIN, their COSTS and importantly their NET PROFITS.

HOW WOULD YOU DO?

DO YOU KNOW YOUR BUSINESS NUMBERS?

I frequently talk to businesses and this is one of the first questions that I ask. More often than not, a hesitant and unconfident response follows, which always strongly suggests that the business owner is ignorant of their numbers.

I estimate ONLY about 10% of business owners really KNOW THEIR NUMBERS, who can confidently tell me:-

  • What their REVENUE SALES currently are
  • What their GROSS PROFIT MARGIN currently is
  • What they are paying for their PRODUCTS, COSTS and EXPENSES
  • What their NET PROFIT is
  • What their CASH FLOW is

And, not only can they tell me WHAT THEIR NUMBERS ARE, but importantly, it is very obvious that they UNDERSTAND THEIR NUMBERS, too.

They UNDERSTAND:-

  • What affects their REVENUE SALES & how they can OPTIMIZE these
  • The BUYING & SELLING PRICES of their products and how these affect their GROSS PROFIT MARGINS
  • How to MAXIMIZE their GROSS PROFIT MARGINS
  • How to keep their spending on their COSTS & EXPENSES to a minimum
  • How to make a GOOD NET PROFIT
  • How to keep their CASH FLOW always positive

These are just a few of the NUMBERS that anyone running a business needs to KNOW AND UNDERSTAND, but, I think many find NUMBERS boring or too challenging compared to other things happening within their businesses. The result is that the NUMBERS are neglected or are delegated to the accountant (which is always a poor business decision).

Business owners who KNOW and UNDERSTAND their NUMBERS and who prioritize them, too, ALWAYS have GREATER SUCCESS in their businesses.

This is ALWAYS THE CASE!

Most often, these business owners are the top 10%, that I have talked about before.

Business owners who do NOT KNOW and UNDERSTAND their NUMBERS and don’t prioritize them, ALWAYS have LESS SUCCESS in their businesses.

This is ALWAYS THE CASE!

These are the 90% who run MEDIOCRE BUSINESSES!

MONEY and PROFIT determines SUCCESS. If YOU make MONEY and a GOOD PROFIT, your business can prosper and YOU will have money to invest to keep going, but if YOU make NO or LITTLE MONEY, your business cannot prosper and will ultimately FAIL.

FAILURE HAPPENS WHEN A BUSINESS RUNS OUT OF MONEY!

The mystery to me is why more business owners don’t realize that ONE of the keys to MAKING A PROFIT is to KNOWING and UNDERSTANDING their NUMBERS and to PRIORITIZING their numbers. If every business owner was to do this, then there would be far less businesses struggling to make a profit and far less businesses failing.

So, let me ask YOU again.

DO YOU KNOW YOUR NUMBERS?

COULD YOU ANSWER MY QUESTIONS IF I CAME INTO YOUR BUSINESS TODAY?

If YOU think that YOU DON’T KNOW YOUR NUMBERS, then YOU must CHANGE!   YOU must become like the top 10% of business owners who are SUCCESSFUL, YOU MUST KNOW YOUR BUSINESS NUMBERS.

REMEMBER –  HAVE SMART BUSINESS THINKING AND SMART BUSINESS ACTIONS!!

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Double Your Profits For your Business & Your Business Success

Double Your Business Profits By Making Small Changes

Double Your Business Profits By Making Small Changes

It is very possible to DOUBLE YOUR PROFITS by making SMALL changes to your REVENUE SALES, MARGINS and COSTS.

DOUBLE YOUR PROFITS BY MAKING SMALL CHANGES

If YOU have read some of my other articles on this site, YOU would have read my comments about the top 10% who achieved huge profits and huge success in their businesses and the remaining 90% who are running mediocre business with mediocre profits.     In my articles, I have also made several references to SMART BUSINESS THINKING and SMART BUSINESS ACTIONS and have said that if the 90% want to migrate to the top 10%, they have to change their THINKING and ACTIONS in their businesses.

In this article, I want YOU to THINK that through SMART BUSINESS THINKING and SMART BUSINESS ACTIONS, YOU could increase your NET PROFITS dramatically by only making small changes to your business.

I know from experience in my own businesses and working with other businesses that relatively small changes can be made that could literally DOUBLE your NET PROFITS, through doing the following:-

  • REVENUE SALES be increased by 20%
  • MARGINS be increased by 8%
  • COSTS be decreased by 10%

Let me give YOU an example for an average business with £125,000 REVENUE (ex VAT), GROSS PROFIT of 50% or £62,500 and COSTS of £40,000.

A PROFIT AND LOSS SUMMARY for this business could look like this:-

  • REVENUE SALES   £125,000
  • GROSS PROFIT         £62,500   (50%)
  • COSTS                        £40,000
  • NET PROFIT              £22,500   (18%)

But if YOU made the changes that I highlighted above, the PROFIT AND LOSS SUMMARY could look like this:-

  • REVENUE SALES   £150,000
  • GROSS PROFIT         £81,000   (54%)
  • COSTS                        £36,000
  • NET PROFIT             £45,000  (30%)

Here the NET PROFIT MONEY is doubled to £45,000 and the NET PROFIT PERCENTAGE has risen 66% from 18% to 30%. Hopefully, YOU can see that a BIG CHANGE to the NET PROFIT has been made through reasonably small changes to the BUSINESS NUMBERS.

Surely £45,000 is MUCH BETTER than £22,500!

But, I hear YOU say that YOU could NOT make these changes in your business, small as they maybe.

My reply would be that these changes could be easier than YOU THINK, so please read on!

HOW TO DO THIS

If YOU have read some of my other ARTICLES on this site, YOU would have read that I have said YOU should KNOW and UNDERSTAND YOUR TARGET CUSTOMERS COMPREHENSIVELY.     This means KNOWING and UNDERSTANDING them MUCH BETTER than YOU do now  –  MUCH BETTER!!!

Through this KNOWLEDGE, YOU will be to achieve the following:-

  • YOU will able to TARGET your TARGET CUSTOMERS much better with your MARKETING, grabbing more CUSTOMERS and making them BUY MORE from YOU.
  • YOU will be able to BUILD A BIGGER ARMY OF LOYAL CUSTOMERS who will return time and time again to BUY MORE.
  • YOU will be able to provide MUCH BETTER PRODUCTS that will provide BETTER HELP and BENEFITS for your TARGET CUSTOMERS.
  • YOU will be able to provide MUCH BETTER CUSTOMER SERVICE that will EXCITE and IMPRESS your TARGET CUSTOMERS.
  • By providing BETTER PRODUCTS and BETTER CUSTOMER SERVICE, YOU will be able to increase your PRICES modestly.
  • By EXCITING your CUSTOMERS, YOU will create WORD OF MOUTH, the most powerful MARKETING TOOL in business, thus reducing your MARKETING COSTS.

All of the above will GROW your REVENUE SALES and GROSS PROFIT and help to reduce some COSTS.    In addition to this, every business owner should do a COMPREHENSIVE AUDIT of their REVENUE, MARGINS & COSTS ideally every 3 months and certainly every 6 months to see where they can GROW their business and make SAVINGS  –  many businesses don’t do this EVER!!

The most successful in business will do this as a course of habit.

If YOU want the same SUCCESS, YOU could achieve it by acquiring this same habit.

Hopefully, this has convinced YOU that this possible.

DOUBLE YOUR PROFITS BY MAKING SMALL CHANGES

YOU COULD DO EVEN BETTER THAN THIS

In my view, doing what I have described is the minimum anyone can do in their businesses –  I THINK much more is possible  –  I am talking about DOUBLING or TREBLING REVENUE SALES!!!

The WILL to MAKE THE CHANGES along with SMART BUSINESS THINKING and SMART BUSINESS ACTIONS is all that is needed.     This will create the FOCUS to look at your CUSTOMERS, your PRODUCTS, your TRADING MARKET and EVERYTHING ELSE in your business and an AVALANCHE of possibilities will unfold to effect the changes that I have described here in this ARTICLE.

TRY DOING THIS NOW!!!

WHY NOT SET YOURSELF THE OBJECTIVE of:-

  • INCREASING REVENUE SALES by 20%
  • INCREASING MARGINS by 8%
  • DECREASING COSTS by 10%

And, DO IT NOW!!!

If YOU wish to discuss this further with me, please email at Robert@prestigebusinesscoaching.co.uk

Or please leave a comment below.

SMART BUSINESS THINKING & SMART BUSINESS ACTIONS!

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How Healthy Are Your Profits

How Healthy Are Your Profits?

How Healthy Are Your Profits?

How healthy is your business?

Are your sales rising?

Are your margins good?

Do you have control of your costs?

Are your Profits growing?

HOW HEALTHY ARE YOUR PROFITS?

If your sales and profits are growing then you should have a healthy business. But if your sales and profits are flat or are decreasing, then your business is not so healthy and you need to take action.

In such a situation, your business needs a complete re-think –  you need to re-think everything within your business, starting with FOUR major areas:-

  • Your Products
  • Your Customers
  • Your Margins
  • Your Costs

You should ask yourself questions about your products:-

  • Are your products matched exactly to the needs and wants of your customers?
  • Do your products bring real benefits to your customers?
  • Do your products make the lives of your customers better?
  • Are your products priced right to give value for money but also a good margin?
  • Have your product sales dipped in the past 12 months and, if so, by how much and why?

You need to sell a high number of your products to generate high sales that keep growing, but you will only achieve that if your products match exactly the needs and wants of your customers.

You should ask yourself questions about your customers:-

  • Do you understand fully who your target customers are & everything about them?
  • Do you have an army of customers that is growing?
  • Do your customers return to buy more from you?
  • Do your customers tell their friends about you?
  • Do your customers get a good customer experience from your business?
  • Has your customer numbers dropped in the past 12 months and, if so, by how much?

It is imperative that you understand who your target customer is and you understand everything about the needs and wants of that customer –  then you should be able to sell them the right product and achieve a large army of customers and keep growing that army.

You should ask yourself questions about your gross profit margins:-

  • Is your margin sufficient to pay your costs and to give you a good net profit?
  • Are your selling prices lower than the equivalent charged by your competitors?
  • When was your last selling price increase?
  • Are you paying too much for your products?
  • Has your margin slipped in the past 12 months and, if so, by how much?

It is important to understand how your margin affects your net profit –  it must be large enough to comfortably pay all your costs and to give you a high net profit.  Are your prices too low and if you were to increase them, would sales slip?  In my experience, if you have a strong product offering, price increases should not affect sales.

You should ask yourself questions about your costs:-

  • Do you have a clear understanding of all your costs?
  • Are you as efficient and lean as you could be?
  • Do you know which costs have increased over the past 12 months, and by how much and why?
  • Are there purchases being made that could be trimmed or eliminated?

It is very easy for costs to creep up and to not be noticed. You should look at each cost and analyse each one and see where quick savings can be made.

From experience, doing this exercise can often generate significant changes to the health of a business. Even just a 10% increase in sales, a 2% increase in margin and a 10% decrease in costs can have a dramatic effect on the net profit, often adding as much as 40%  –  now that is surely worth having?

Have a think about this now!

This is a very quick snapshot of possible remedies for an unhealthy business, but if you would like some more advice, email me now: Robert@prestigebusinesscoaching.co.uk.

Or leave me a comment below.

THINK SMART, ACT SMART!

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