As a business coach, I’ve appreciate the power of numbers and data. While they may not be the most exciting aspects of running a business, they are undeniably essential. Having a solid grasp of facts, statistics, and data can lead to greater success in your business journey.
The Entrepreneurial Journey: More Than Just Earning Money
Running a business is not just about earning money. Yes, having a job with its regular pay cheque and benefits may sometimes seem like the easier option, but being self-employed can be more fulfilling and enjoyable. Being a business owner requires time, energy, and effort to learn and understand the necessary information, such as numbers and data.
Cutting Through the Noise
When I work with clients, my focus is on helping them become better business owners. I do this by cutting through the noise and providing them with the essential knowledge they need. One of the first things we discuss is numbers and data. Why? Because it’s impossible to help someone progress towards their goals without knowing their starting point.
The Marathon Analogy
To illustrate this point, let me share my experience of running a marathon (Paris, 2018). Just as I needed to know my starting point and create a training plan to achieve my goal, business owners need to have a clear starting point and a step-by-step action plan to reach their business goals. Understanding basic data, such as profit margin, is crucial for making informed decisions.
Understanding Turnover and Profit
In business, it’s important to understand the difference between turnover and profit. Turnover is the total sales a business makes, while profit is what remains after deducting all costs. These costs can include bank fees, training courses, seminars, virtual assistants (VAs), podcast editors, subcontractors, office supplies, and mobile phone bills.
The Importance of Profit Margin
Profit margin is a key indicator of a business’s financial health. It can vary depending on the industry and the specific business. For instance, my business runs at a high profit margin of around 75-80%, but businesses with higher costs, such as those with premises and staff, may have lower profit margins.
Lessons from My Own Experience
I’ve had my share of experiences running a business with high costs, which resulted in a low profit margin. These experiences taught me valuable lessons about profit, turnover, and costs. Now, I use these lessons to help others navigate their own business journeys.
Growing a Business: More Sales or Reduced Costs?
Knowing the profit margin is just the starting point for growing a business or achieving work-life balance. There are two ways to grow a business: selling more and reducing costs. By analysing these numbers, businesses can identify areas for improvement, and see growth.
Evaluating Pricing and Expenditure
For those seeking to work fewer hours, I suggest looking at costs and finding ways to save money. However, it’s also important to evaluate whether the business is actually making money. This involves a careful review of pricing and expenditure.
A Success Story
I recently worked with a client who was struggling to make money with her business. Through a cost exercise, we discovered that she was losing money because she hadn’t factored in all the necessary expenses. However, we worked together and she ended up getting a contract in a school, which led to a job offer, and she closed her business. This success story underscores the importance of knowing your numbers in order to make informed decisions about your business.
Let’s Work Together
If you’re struggling with understanding your numbers, I’m here to help. I offer a 30-minute strategy session to provide clarity and direction. Having clarity and direction is crucial to avoid wasting time and energy on the wrong things. I want to help you protect your time and energy so you can have a flexible and fluid life.
To book a strategy session with me, click here. Let’s work together to make your business journey a successful one.