So…How do you use your numbers to make decisions?
Once you have your paperwork sorted, check out here for a recap, and you have your weekly process in place. You will start to see patterns.
These are your spending habits, your expenses and your income. You will start to notice when money is going to come in and when that direct debit you set up is going out. You will take note of your bank balance.
You know how much it takes to run your business each month.
You know how much you need to get paid each month.
This knowledge is unique to your business, no one else can tell you this.
Now, picture this, your new client is asking for a discount. You don’t want to lose them, nor do you want to work for nothing. What should you do?
Your numbers will tell you.
By looking at your costs and working out how much it costs you to work each hour, will help you decide if you can offer a discount or not.
If your client is ‘squeezing’ you, the numbers will help you to walk away. If you are not going to make a profit on a deal you should not accept it.
If you offer your clients different products or services, the numbers will tell you which product or service is making the most money for you. This may help you trim down your offerings to one or two items – allowing you to maximize your time and your profits.
Understanding your numbers helps you to set your prices and stick to them.
Including in your monthly accounting review a look back at your last quarter, half yearly or yearly numbers help you move your businesses. What was right to offer last year at a certain price level may not be right now.
The numbers in your business will show you this.