Do You Know Your Numbers?
How well 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 IN THE DEN?
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.
- 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!!