What sets successful entrepreneurs apart from the rest is the fact that they know their numbers.
#AndrewSherman writes, All companies will inevitably encounter cash flow or financial problems – it’s just a matter of when. Knowing, understanding and planning based on your numbers can help you make informed decisions.
There’s an old saying that “We manage what we measure.” Even small business owners need to act “CFO like” when it comes to developing internal financial reports and dashboards. Get into the habit of producing reports, then reviewing the results by yourself and your advisors. Consider establishing a relationship with a coach, mentor or consultant with whom you can discuss this in confidence.
No matter what your business is, you need to know your critical numbers, then build a system to monitor them carefully and compare them to key industry ratios. You have to decide on 3 to 5 key financial numbers that is critical to your business success.
They will mostly consist of the following depending on your industry:
– Cash flow forecast
– Gross Profit margins
– Inventory days or Stock turnover days
– Break-even sales figure
– Nett Profit
– The Financial position relating to liquidity in respect of assets and liabilities.
Wishing you all the best in pursuit of continuing to be brave, living your passion and knowing your numbers”