Know thy numbers
Do you know how many customers – or sales – you need to make a profit? To break even?
How long will you need to work just to pay the tax man? How many prospects generate enough customers to make your profit margin? What is your profit margin?
If you’re struggling to answer these basic questions, you’re not alone. Most business owners I’ve coached over the years have no clue what their real numbers are. They have a vague guess or a “gut feel”.
They don’t really know because they don’t want to be faced with the reality that the numbers will show them. But to prosper, you’re going to have to put the fear of numbers behind you.
Mastery of your numbers gives you an edge over your competition and gives you the power to make better decisions.
Numbers tell you where you are
If you know how many people a day come through your doors and how many actually buy something, you have a handle on the number known as your “sales conversion rate.”
If you always convert 15% of your prospects into a sale, and you need 12 sales, you can easily determine that you will need 80 people through your doors to be profitable.
Numbers guide you where you want to go
Are you a professional who charges £50 an hour who now wants to double your income? You might need to determine whether it is better for you to charge £100 over 2000 working hours a year or £200 multiplied by 1000 working hours.
In either case, the numbers will give you an indication of what can work or show you where you might need to revamp your business so you can get to that £200 an hour goal.
Numbers help form a plan to get there
Sometimes the numbers will reveal your current mix of products and services and market conditions just won’t support your revenue and profit targets.
That’s not bad news – it’s just news. It will help you determine what you need to do to improve.
The numbers might show you that you can afford to hire a sales person to sell and additional administrative people to handle the books while you build the business in new and innovative ways.
What do the numbers look like in your company?
Take some time – right now – and introduce yourself to the past, present and future numbers of your business, because if you don’t master your numbers, your numbers will surely master you.