The Numbers Game: How Understanding Finances Empowers Local Business Owners

As a local business owner, you need to know your numbers better than your CPA.

I've seen business owners time and time again struggle when asked about their gross profit, revenue, or labor cost. Their reply??

"My CPA takes care of it."?

The truth is, understanding your numbers and how they impact your business is like knowing the heart and soul of your company. This knowledge enables you to make informed decisions and steer your business towards success.

Key Numbers to Monitor

1. Gross Profit and Net Income: The story behind your top-line sales number is essential, but understanding your gross profit and net income paints a more vivid picture of your business' well-being. Knowing these numbers is like understanding the heartbeat of your company, allowing you to make better decisions for its future.
2. Assets and Liabilities: Your balance sheet is the story of your business' value. Assets are the things that give your business more value, like your bank account, inventory, and receivables. Liabilities, on the other hand, are the debts that could potentially take away that value, such as accounts payable and credit card balances.

Knowing Your Numbers: Unlocking the Full Potential of Your Business

When you truly understand your business numbers, you are unlocking the full potential of your company. Here's how knowing your numbers can make a significant difference in your business:

1. Make informed decisions: With a clear understanding of your gross profit, net income, assets, and liabilities, you can make well-informed choices about your business' future. These decisions are rooted in the very core of your company, ensuring you're always acting in its best interest.
2. Identify and adapt to impacts: By keeping an eye on your numbers, you'll be able to spot changes in market trends, customer behaviors, and external factors that may impact your business. Understanding the financial implications of these shifts allows you to quickly adapt your strategies and maintain your company's well-being.
3. Reinvest with confidence: When you're familiar with your business' financial health, you can make confident decisions about reinvesting in infrastructure, employee benefits, and other improvements. You'll know when it's the right time to invest, ensuring your business continues to flourish.
4. Manage effectively during uncertain times: Having a deep understanding of your numbers means you're equipped to handle your business even in times of economic instability, such as recessions. You'll know when to conserve money, when to invest, and how to maintain the heartbeat of your business, no matter the external circumstances.

By knowing your numbers and understanding their impact on your business, you hold the key to your company's heart, enabling you to nurture its growth and navigate any challenges that come your way.

Taking Action: Regularly Review Your Numbers and Find a Good CPA

To stay connected with your business numbers, review your cash flow weekly and analyze your profit and loss statement and balance sheet biweekly and monthly. It's like checking in on a friend, ensuring they're doing well.

Additionally, find a CPA who genuinely cares about helping your business grow and is willing to offer guidance on taxes and business management. Just like a trusted companion, the right CPA will be there to support you and your business every step of the way.

If you're a local business owner seeking guidance on understanding your numbers and growing your business, consider applying for our Local Business Advisory Board. You'll be part of a supportive community of fellow like-minded entrepreneurs who can help you navigate the world of business – with a friendly touch.

Apply for the Local Business Advisory Board Today