Make money: Take charge of your numbers
Make money: Take charge of your numbers sounds like obvious advice.
Above all, there’s an immediate problem, and that is numbers scare people. Your school Maths teacher may have been responsible. To clarify, numbers can feel confusing, boring and not what your business is about.
I love lots of things, and one of those things I love is numbers. So, let me tell you why I love Numbers, and why you need to fall a little bit in love with them if you want your business to survive and thrive.
Make money
Moreover, numbers show the impact on what you do in your business. Your numbers highlight:
- How much profit you are making
- Tell you what you are spending
- How rich or poor you are
- Cash in the bank
Business numbers
Most importantly, use numbers to create accountability and targets . Clear targets motivate people to high performance levels. The numbers in your business are used to create a budget, a plan, an aspiration.
So, budgets are your stories of tomorrow. They show choices, aims and objectives. Targets are typically shown in terms of money, i.e. income, costs and profits. Tough targets play their part in motivation and performance.
Measure your costs
Consequently, your numbers are there to to measure how well your business journey is going. So, use your numbers to translate your business story into financial outcomes. If income is more than expected, and/or costs less expected then this is over performance. If income is less than expected, and/or costs more than expected then this is under performance.
Results
A cliched phrase is what ‘gets measured gets done’. While we are talking cliches let’s throw in another, ‘manage what your measure’. When you start measuring and managing using numbers, performance improves. Don’t be a dick and use any old numbers, use ones that are controllable, relevant and meaningful to your business.
Control and improvement
Numbers can be used to set targets. If you have targets you can control and improve. Be careful though, if targets are too tight and difficult then getting the best from your team will not happen. Looser, or easier targets, which have little motivational effect, will usually be achieved.
It sounds odd, but business should expect a degree of under performance to get maximum motivation and performance. Under performance is normally seen as a sign of failure and is seen as poor performance.
If this is the case, then next time budget holders will submit more easily achievable budgets. The result being under performance. But with reduced motivation of managers to achieving optimum performance.
To get the best level of performance, small amounts of under performance against budget is healthy. It is not failure. Perfect performance against budget indicates a loose budget, and, little motivational impact.
Conclusion
if you’re serious about your business, you need to grab hold of your numbers, you need to make those numbers do things for you. Think of numbers as the supporting actors in the script of your business. They help tell your story, and it’s really important that we learn how to connect and get to grip with those numbers to help us identify where we can make those successes and avoid those failures
You want to make money then take charge of your business numbers.
Get in touch with us to see how we can help you and your business and all your accounting and tax needs. For more business and finance , news, advice and tips, don’t forget to watch our weekly broadcasts, listen to our weekly podcast I Hate Numbers.
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