Hands up if you hated maths at school? Yep, it’s a fair percentage of you. OK, now hands up if you diligently work your numbers in your business? Hmmm, not many hands left up are there? Why is that?
Well, it could be a number of things (sorry about the pun). Yes, you may have developed an aversion to numbers at school, but if you are running a business and you really want it to be successful and deliver what you want, then you need to get over that and accept the responsibility of delivering to budget. Wooo, scary! But it doesn’t have to be as you will see later here.
Many business owners who inquire about our business coaching are engrossed in “doing” and too busy to “manage” and therefore get by on gut feel. Trouble is that you get badly bitten, with unexpected invoices, bills that don’t get paid, costs that blow out and then you wonder why you have worked so hard and not made the profit you hoped for.
Some business owners will actually choose to deliberately ignore their numbers. This is because they know that things aren’t right and part of their coping mechanism is to hope it just sorts itself out somehow. Hmmm, not a great plan and you really don’t need to be warned of the dangers of this approach.
So how can you turn numbers into being your friend? How can you embrace them and look for them and want to know if they change or are out of kilter? Well, the advice I give to my business coaching clients is to first of all focus on the numbers that really matter and set goals (budgets) based on reality. What sort of numbers should you measure? Whether you run an electrical services business, a clothing store (online or bricks and mortar), an IT services company, every business needs to be measuring:
- Number of leads
- Conversion rate of leads to sales
- Volume and amount of sales
- Average price of a sale
- Average margin of a sale
There are other important numbers, depending on the type of business you run, e.g. stock levels and stock turns if you carry stock, or staff productivity rates if you are in a service industry, repeat bookings if your business is in the health sector (chiropractors, osteos, physios)
If you take the time to measure these and then see if they match what you have budget for, all of a sudden you will know what is happening in your business and you will be able to take timely and appropriate actions. This will reduce stress levels and even allow you as the business owner to be more productive.
So go on, go hug a number or two and start a new relationship with them and you’ll be surprised at the love you‘ll get back.
Martin Coyle loves numbers but he didn’t always. His time running and then selling his own successful businesses cured his “maths-aphobia”. Now as an experienced coach for small businesses in Melbourne, he helps business owners take control of their numbers and their business to get the results they want.
Hear about the results of some of Martin’s clients here: