The Story of the Missing Numbers

I was talking with a business owner and investigating at how hard he works every day.??He told me passionately how much he loved working to created results.??He enjoyed the buzz of solving problems and the experience of getting things done.?

I asked him how he knows whether he is doing this effectively.?

He said he looks at his bank account and sees the cash there and feels good.?

I then asked what he is measuring when he looks at the cash.??He said “How much I’ve got to spend”?

There it is.???

A very hard-working person who doesn’t necessarily know whether the work he is doing is creating the right results in the longer term.?

Cash is one thing to look at because without it your business dies….?

However - how do you measure the effectiveness of the systems in your business to see how good they are at converting sales revenue into profit.?

If you take receive ￡1 in sales revenue, how much do you get on your bottom line? (Profit) ￡.028, or ￡0.87??

How do you?quickly?look at how well you are achieving this value every day??

Or do you wait until after the end of your financial year and ask your accountant how well you are doing??

The amount in monetary value in pounds sterling (in the UK) on your “bottom line” is called Net Profit. This means you have accounted for ALL costs – those directly connected to the unit of sale PLUS all the other costs which occur around your business whether you produce zero units or 100,000 units per hour.?

When you compare the profit left over after all expenses to the amount received in sales revenue the multiply it by 100 you create you Key Performance Indicator called net Profit Margin. This is a percentage, a comparison, a ratio.?

If you understand this and use it everyday you are doing great!?

Many business owners do not fully understand how helpful this measure is and what it tells you.?

Do you look at this every year, month, week, day??

Where would you find the key bots of information? How is it reported to you??

What else do you look at every day, week, month or year to understand how well your business is working for you??

The story of the missing numbers is about the (sometimes) apparent lack of understanding by some business owners, who have never been taught how to listen to their business.?

Your business is telling you a story everyday in the way the numbers show up.?

If you aren’t listening to this story you might be making poor decisions or you may be doing better than you think.?

One husband and wife team I worked with were in conflict in the business and in their relationship.??Lots of arguing and stress, judgement and recriminations, resentment and fear.???The husband had a full understanding of the numbers in his business, because he had an accountancy background.??His wife did not and constantly felt as if they were failing.?

Three things here:?

1. They did not communicate effectively (they were too busy “doing” the work)?
2. He failed to notice she had no understanding of their success?
3. Their business nearly failed due to their relationship cracking under the strain of being busy?

They had an extremely successful business but neither of them enjoyed the success.?

She thought they were failing despite/because of how hard they were working.??He knew the numbers, but felt she wouldn’t understand….??This could have been a very unhappy ending – but they decided to take on a business coach!??Hurrah!??A happy ending.?

The numbers got listened to when they showed up everyday and both people enjoyed their success. They began to relax and feel successful and they got back in touch with their relationship.?

What’s the story of your business numbers????

Do you have a happy ending??

Are you truly comfortable with reading your numbers from the financial reports??

Would you like to learn how to do this and how to listen to your business when it talks to you with the numbers it brings you??

If you do (and I would like to suggest this is really important) please do join us on March 11th?for our FINANCE RICH event so that you can become a master of understanding your business numbers.?

?You too can have a happy ending …?

Click here to register :https://bit.ly/3BkYvnj

Chamber members, BNI members and current clients only pay ￡200 plus VAT.

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