July 30, 2014
How important are numbers to your business, any business? Numbers tell you many, many things: sales, profits, debt, expenses, accounts receivable, the health of your company—and many, many more things. Yet I continue to be amazed by the amount of business owners that fail to keep up with their numbers. In a word, many are oblivious. Many hate tracking numbers, don’t like being bothered by their numbers—they have a “feel” for how their business is doing. As long as cash is flowing they feel good. When it is not, they do not.
If you do not like keeping up with your numbers, hire someone to do it for you and have them give you reports that you review daily, weekly, monthly, depending on your business.
I have a client that is a doctor that took an extended vacation last year in which her practice began to suffer due to lack of new patients, revenue. When she returned she immediately dug in and began to get her business back on its feet. When I asked her what her accounts receivable balance was, she did not know and guessed approximately $60,000. I had her look it up—to her amazement it was over $148,000. She was focusing on new sales and yet was ignoring the sales she had already made—just not collected. That money is hers and she immediately shifted gears and began to work on collections, and thus got her practice up and running more efficiently, much more quickly.
Accountants are always conveying horror stories about how poorly their clients keep their records. Some run their numbers through their bank accounts only. Some still put receipts and notes into boxes and deliver them to the accountant at tax time for them to figure out. Some do not spend any time talking with their accountants throughout the year to understand tax strategies that would be profitable for their business and lessen their tax burden.
Billable hours are another area for improvement in many businesses. Many business owners do not track billable hours against hours worked for their business. As a result, they do not develop strategies to improve their billable hours ratios.
Most business track sales/revenue, customers, profits, yet they fail to track, evaluate and develop actions to improve the numbers that create the sales, profits, etc. Many estimate conversion rates, and most estimate them poorly. In fact, when really tracked I find most have grossly estimated their conversions from leads to sales.
Just knowing your numbers gives you a step up. If you know your numbers, you can do something about them. If you are oblivious to your numbers, you are just that—unaware and unconscious. Some may be comfortable with that, however, the most successful business people do not live on the bottom of the accountability chart. They know their numbers, develop strategies and actions to improve those numbers and make things happen that will make the strategies become a reality and produce improved results.
Do you know your numbers? Are you tracking your numbers? Are you evaluating your numbers? Are you developing strategies and taking action to improve your numbers? Or, are you oblivious to your numbers?