In This Episode
Too many small business owners will respond “I don’t know” when asked questions about their numbers. If you are not in the regular habit of reviewing your numbers as a business owner, this is something you should start to change. One of the easiest ways to start is by reviewing your financials monthly. When we say financials, start with your Profit & Loss Statement and your Balance Sheet.
It is rare that when we start with a new business coaching client that they are already in the regular habit of reviewing their numbers. The response we get usually goes something like, “We meet with our accountant a couple of times per year to see how things are going.” Talk about stressful! How do you sleep at night as a business owner if you don’t have a sense for how things are going or how they are going to be going forward? So we start getting them comfortable with their numbers by having the business owner Present their numbers every month.
When we talk about making money on purpose, this is something every business owner wants to do. Unfortunately most small business owners don’t pull together an annual Profit Plan to map out how they are going to make money in the upcoming year. During the show today we highlighted several ways to get started down this path of making money on purpose.
Pulling together a plan to make money on purpose starts with forecasting Sales (you may refer to it as Revenue or Income or Top Line). If we don’t have Sales then we don’t have a business, but a hobby, unless you’re in start up mode. The first step in forecasting Sales is deciding how you want to do it. Do you want to forecast your Sales based on the Products/Services you sell or do you want to do it by Customers/Target Markets?
Just sit and ponder that for a minute. Does it make more sense to forecast your business based on Products/Services or Customers/Target Markets? Maybe it’s a hybrid. For instance, we forecast our business based on Customers and we do it within each of the Service areas (e.g. 2-on-1 Coaching, Mastermind Groups, DISC training, etc.). What makes sense for your business?
This is a key question to answer because what will happen next is you will start to dig into your historical Sales and see what info you have. Have you been tracking Sales by Products/Services or by Customers in the past? We find many folks who don’t track their sales in any consistent manner. Instead they are just tracking what’s coming in or going out of the bank account. Again, talk about stressful!
No matter what you find, chances are you will start to track Sales differently going forward. You see, once you start to track and measure things, you’ll be able to have more visibility in your business. Even better visibility than you get by simply being there every day. If you haven’t done a Profit Plan before, no worries as it’s never too late to start. Try forecasting your Sales for the next 90 days. This is one way to ensure you’re on the right path to making money on purpose in Q2!
CLICK HERE to download a spreadsheet to help you start pulling together your sales forecast.
Join Us Next Time
Join us next week when we will chat about selling your business. More specifically we will talk about How To Get Your Business Ready To Sell. Whether you are currently thinking about selling or not, it’s always good to have your business ready to go in case you get that call with an offer you can’t refuse!