As you know, there’s a lot more to running a business than just the numbers. There’s the relationships, the communication, the products, the services, the marketing, the sales, the systems, the visual merchandising…
You get the idea.
But those numbers play a part in every aspect of your business. And the more relevant they seem, the more you can use them to your advantage.
Here are ten ways to make your numbers more relevant to both your business and the goals you have for it.
1. Make sure you understand them. This step seems obvious, but it’s something businesses often overlook. Do you understand your Profit and Loss report, Balance Sheet, Cash Flow statement, and how they interact? And do you realise they won’t show you everything about your business?
If you don’t know what your numbers mean and how they all work together, talk to your accountant.
2. Determine what numbers are worth measuring. Your business has dozens if not hundreds of numbers that can be measured. But rather than drown in them all, identify the most important indicators and focus on measuring those.
3. Know what you want them to be. Once you understand what the numbers mean, you can start thinking about what you’d like them to be. For example, you might like next year’s after-tax profit to be $100K.
4. Start planning how you’ll change them. Now that you know what you want your numbers to be, it’s time to work out how you’ll achieve them.
Let’s say you want to double your sales figure. How many of your existing customers will need to buy more from you? How many new customers will you need, and how will you attract them? If it takes five conversations to attract a new customer, and you want 20 new customers, that’s 100 conversations you need to plan for.
5. Monitor them. Knowing your numbers is one thing. But to find out how your business is really doing you need to know how they’re changing over time. Are your sales actually going up? Or did your business just happen to have a great week?
Most businesses check their sales figures weekly, if not daily. But how often do you review your business’ profit and cash positions? These should be monitored regularly as well, though whether it’s every week or every month will depend on your business.
6. Be ready to adjust your plans when necessary. If you didn’t hit your last sales target, make sure everyone knows it needs to be made up somewhere along the line. But don’t just add it to the next sales target and forget about it. Come up with a plan for how you’ll make up the shortfall.
7. Measure your non-financial data, too. Technology has given us so many things we can measure—website visits, levels of interaction on Facebook pages, new business enquiries, number of sales within a certain timeframe, number of visitors to the business premises (and whether they’re new or existing customers), and so on.
But remember: Just because you can measure them doesn’t mean you should.
8. Make them visible to everyone in the organisation. Knowing what your business’ key numbers are now, and what they should be at the end of the week/month/year will keep everyone motivated and in tune with what the business is trying to achieve.
9. Be prepared. While you can’t change, what’s happened in the past, you can change what happens in your business’ future. And the more information you can glean from your numbers, the easier it will be to prepare for that future, and minimise the chances of any nasty surprises.
10. Know what the numbers mean in all areas of your business. There’s no point being an expert at controlling your product margin if you don’t understand how to control your overheads or how many conversations you need to obtain new customers. You need to be on top of the numbers in every area of your business.
When it comes to running a successful business, numbers are only part of the equation. But whether they excite you or bore you to tears, you need to know what they are, what they mean, and how you can change them.
Want to know about your numbers? Get in touch with us here at Astute Mode, and let us help you turn those numbers into information you can use to grow your business.