I have a great deal of respect for Deborah Meaden (BBC Dragons Den) and her analysis of a business is to look at the numbers. It is shocking how many business owners have an unhealthy relationship with the numbers in their business.
The numbers of a business is like the dashboard of a car, you need to understand how to read the speedometer, the fuel dial and the warning lights etc…to get to your destination without running out of fuel or breaking down on route.
In order to grow a business it is crucial to understanding basic accounting, to get regular management reports and to analyse the business in terms of sales and marketing and variable cost.
Do you Understand your Numbers?
· Your sales process from lead to sale and the cost of getting a sale?
· The marketing effort that gives the highest return on investment?
· Your cash-flow and how your stock levels, payment terms, staff cost affect cash levels?
· The accounting ratios that is important to your business and industry?
· Your customer profile and what proportion of your sale are cross-sell and/or up-sell?
· The information you need to compare in your regular management reports?
· The average order value and the profit margin of this order.
It is frightening how many business owners’ think cash is profit, or that money in the bank means the business is profitable. Being able to read the numbers of the business allows the business owner to regularly measure the path. This creates opportunities to modify and improve the numbers while the business is in progress so ensuring the desired destination is reached.
Take some time to work on your business:
I want more businesses to do more of what is great about their business for their customers; I want business owners to stop worrying because they do not have a clear path and do not know which numbers are important; I want business owners to have a clear focus and the confidence to move their business forward.
Understanding the numbers of your business is essential; as a MBA Business Consultant and Mentor with real business experience of growing business, the ‘Business Value Hour’ on 22nd May will give business owners a sample of the possibilities in growing their business. Only five sessions available so take a look and book yours now! http://businessvaluehour.eventbrite.com
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Janice B Gordon: The Problem Solver Business Growth Consultant, Mentor, Speaker and Author. Business Evolution – Creating Growth in a Rapidly Changing World will give you the guidance you need to evolve you and your business and exceed your customers wants and needs.