Your Business Is Talking to You. But Are You Listening?

How many of us are experts at avoiding things we don’t like or care to do (if you could see me, you’d see me raising my hand and wildly waving)?

Even though my career has been me submerged in numbers, I completely get that many people do not enjoy numbers as much as I do. Believe me, there are many things I feel the same way about!

But when we’re business owners, we need to become friends with our numbers because they are the language our business uses to tell us when things are going well…or not so well.

Your numbers are talking. And they’ve got a lot to say about where your business is heading.

So, let’s dive into some important figures to see exactly what your business is telling you.

1. Revenue Says: “Here’s what’s working.”

Your revenue is more than just a “how much money came in” tracker. Your revenue tells you what your clients are buying and which of your offers are resonating.

Here are some things to consider when reviewing revenue:

• Where did my revenue come from this month?

• Which product/service brought in the most revenue?

• How much effort did I have to put in to earn this revenue?

Once you answer these questions, you can use this information to plan future action. Determine which products and services you should double down on because they’re bringing in the most revenue. Or see if there are ways you can streamline your efforts to generate revenue so you’re still generating and increasing revenue while not having to input as much effort into earning it.

2. Expenses Say: “Here’s where your energy (and money) is going.”

Revenue doesn’t tell the whole story. You could be generating six figures in revenue but if your expenses are eating all of that away, you’ll struggle to have a profitable and sustainable business.

Instead of blindly going in to cut costs, here are some questions to answer to make sure your spending isn’t out of control:

• Am I actually getting anything out of having this tool or membership?

• Are there lower cost options available that will get the same job done?

• Do I even use this thing (membership, software, etc.) that I’m paying for every month?

Regularly reviewing your expenses will help you catch things you’re spending too much on or things you’re not using anymore so you can cut them and increase your profit.

3. Profit Says: “This is what you actually get to keep.”

Do you ever see the gurus who tell you they’re earning six figures? They’re usually talking about the topline revenue number we talked about above.

But the problem with only focusing on that number is it doesn’t net out your business expenses. That’s where your profit comes in. It’s what’s left over from your revenue after you’ve accounted for all your expenses for the month.

Don’t get me wrong, increasing revenue is important. But so is keeping expenses in check like we discussed above.

Here are some things to ask yourself when it comes to that profit number:

• Am I paying myself consistently and able to meet my personal goals with what I’m paying myself?

• Do I know what my profit margin is (hint: it’s the amount by which revenue exceeds costs)?

• Could I cover my expenses if I didn’t sell for a month and do I have enough to set aside money for taxes?

If the answers to these questions aren’t where you want them to be, it’s time to go back to revenue and expenses and figure out how to increase your revenue and decrease expenses so you have more profit to accomplish your goals.

4. Cash Flow Says: “This is how your business breathes.”

Cash flow is the pulse of your business and is often overlooked by business owners. Many people focus on their profit and loss and the revenue they’re bringing in but then don’t pay attention to the cash in the bank account. The startling statistic is that businesses fail because they run out of cash. That’s literally it.

Instead of just focusing on revenue and profit, pay attention to the following:

• Your actual cash in the bank

• Your inflows and outflows of cash in your bank account

• Timing of cash inflows and outflows: Are you bringing in money before or after you need it?

Understanding your cash flow will help you stop being reactive and help you be better prepared, so you don’t end up running low on cash.

Don’t ignore what your business is saying.

You wouldn’t drive your car across the country while you ignored your gas gauge, warning, or oil lights.

If you’re traveling along in your business and ignoring your business finances, you’re essentially ignoring warning lights your business may be sending out to you.

I’ve never met a business owner who was able to grow a successful, sustainable business when they were ignoring their numbers.

I’ve met plenty who were ignoring their numbers and were struggling to grow and not able to figure out what wasn’t working.

So, which will you choose to be? Will you choose to keep your business performing in top shape by listening to what it’s telling you? Let me know in the comments!

PS..If you want step-by-step guidance on how to read your numbers and the most important things to take away from them, I created the Clarity and Cashflow Toolkit to help you stop guessing and start getting intentional.

Grab your copy HERE.