Don’t forget the numbers as you direct your sales and marketing efforts.
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This book gives you the essential guide to easy-to-understand tips and strategies for achieving greater financial success.
October 6, 2020 3 min read
The opinions expressed by the entrepreneur’s contributors are their own.
As an entrepreneur, you start your new business with hopes and dreams. You grow your business, you want it to be successful, you have lofty goals, and you do everything possible to achieve them. You swear you’ll be the best
But do you know your business numbers? Because business is all about numbers. Have you thought about what happens when you make business decisions without knowing how it will affect your bottom line?
Don’t go into business blindly. You need to understand how your decisions will affect your company’s profitability. The reason entrepreneurs do business is to make money. So if you don’t keep track of the money you’re making, or even know if your business is making a profit, the purpose of being in business is ruined. Here are four reasons why you need to familiarize yourself with your company’s finances.
Related: 7 Tips for 7 Numbers in 2020 and Beyond
1. You can create a financial plan
A financial plan is important as it dictates your business direction. You can set goals like sales goals and monitor your progress against those goals throughout the year. You can also set profit margin targets to ensure your business is profitable. You should do this to ensure that your business is spending not so much that you are not making a profit.
2. You can identify problems before they become major problems
If you monitor your business year round, you can find that problems are forming that can potentially lead to bigger problems and cost you a lot of money. But because you are monitoring your numbers and knowing your numbers, you will see this problem before it turns into a huge loss of money and make adjustments to set course. This actually saves you a lot of money as you have prevented financial loss from occurring.
The US Small Business Administration explains: “A close look at money-in and money-out helps to maintain a sustainable balance between profit and loss.”
3. You can understand how every decision you make as a business owner affects your bottom line
Because you understand your business numbers, you’ll have a solid understanding of how your business decisions will affect your company’s profitability. You can make confident business decisions knowing that those decisions will increase the profit line in your company.
Related: 3 Reasons You Should Always Know Your Business Financial Health
4. You can stay in business for the long term
One of the main reasons companies close their doors is not being profitable. Don’t let that be your business.
If you are the CEO of your company, you are likely to take on the role of many because you cannot afford to hire all of the professionals. You are likely the sales manager, marketer, operations manager, and account manager. But don’t forget to include the finance manager in these roles. Investing in this skill now will not only pay off now, it will bring your business into the growth phase. If you can afford to hire financial aid, you always need to be involved in the numbers and decisions.
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