90% of small businesses fail within the first two years!
Whilst there are many reasons that could be found for this failure, I believe that not knowing your numbers is a high contributing factor.
“Though it’s cold and lonely in the deep dark night, I can see paradise by the dashboard light”
This is a line from Jim Steinman’s lyrics in the song by Meatloaf.
It’s about two young lovers planning to go all the way.
My assumption is that most small business owners want to go ‘all the way’ to business success and a bright future.
Is your business built to last?
One theme that runs through all my coaching sessions is the fact that business owners are not able to quantify their financial success.
Ask yourself these questions:
- Do you have a target for Revenue this month?
- Do you have a target for Expenses this month?
- Do you know if your marketing spend is producing the desired results?
- Can you tell me what your bank balance is right now without looking?
- Do you have a dashboard of the most important figures to track?
Reflecting on this I came to the conclusion that either the business owner is uncomfortable with bank statements, accounting and excel spreadsheets or they just have not realized how important it is for the business owner to know their own numbers.
What happens if you don’t set targets?
Well, first of all no target means no direction, no focus and to focus on everything is to focus on nothing.
If you step up to the archery target with no training and no practice, draw your bow, close your eyes and shoot chances are arrows will land all over the place and you will never hit anything.
You are not going to beat your competition that way, people are going to write you off, you will fail at archery.
If this is your business, it’s like selling to everyone, no target market, spending indiscriminately on the next cool idea, getting into debt, losing your best employees and watching your business wither and die.
But that’s NOT you
Running a business doesn’t have to be hard but, like archery, often the fun is in hitting the target not just once but many times. Celebrating the wins with your team feels great.
So what are those simple secrets:
Step 1: Work with your accountant to figure out a Revenue and Expense trend over the last 6 months
Step 2: Estimate the Revenue and Expenses you can expect for the next 6 months taking account of any changes – new hires, new product launches, expenditure on new machinery or price increase from suppliers
Step 3: Set realistic but higher Revenue and lower Expense targets to aim for
Step 4: Figure out what actions you need to take to get there. What other numbers are important in your business? Number of leads? Number of new clients? Number of lost clients? Average revenue per customer? Return on Investment? Debt to Equity ratio, Stock turnover etc
Step 5: Create a dashboard of the most important ones and track them daily or weekly, review monthly and amend your tactics where necessary
Finding Paradise
Business ownership can be ‘dark and lonely’ but with a dashboard to illuminate the way you can reach your own version of paradise.
Finding a business partner or coach that you can trust to have your best business interests at heart, guide you along the trickier parts of this exercise helping you to reach those targets is one way to success.
For a conversation on this topic you are welcome to #JustAskLinda
Enjoy puzzles? I do!
We grow the most when we face challenges. Through questions and exercises, I provide insights to puzzle out solutions to your business challenges In my work, I am mentor, coach, adviser and cheerleader for my business clients.
GLEE is my own personal philosophy for business and life.
Grow, Learn, Empower, Enjoy.
Let me show you how to Grow with GLEE!
Linda Dent
CEO & Founder
