By Gerald Richards
People don’t want to know their numbers because they are afraid of what it may tell them. People don’t want to know their numbers because they make the excuse that they were “no good at school with maths” (Knowing one’s numbers has little to do with maths). People don’t want to know their numbers because that’s the Accountant’s job. People don’t want to know their numbers because it’s not “sexy”.
YET IT’S FUNDAMENTAL TO THE SUCCESS OF THEIR BUSINESS.
People say they are making a profit; but are they? Let’s first talk opportunity cost which is if you did not go into your own business what could you have done with that money. Example:
Previous salary/earnings $50,000 per annum
Money borrowed to start the business $20,000 at 5% = $1,000 p.a.
This $51,000 must be taken into account before any other figures are considered. If someone says they are making $500 a week profit, they need to make an additional $500, before they’ve made a profit. And this is a low-cost simple exercise.
An example of using financial numbers to increase sales.
An analysis of restaurant figures showed that they sold coffees after the meal, but the ratio could be higher. The staff were trained from “Would you like any coffees?” or “Is there anything else I can get you?” to “What sort of coffees would you like?” sales increased. This was further enhanced to “Is there anything else I can get you? We have some exciting liquor coffees through to excellent short blacks.” Sales further increased as well as the average sale.
The five ways to increase sales is through increasing Leads, Conversion, Average sale, Frequency and Price. Do you know the numbers on each of these and your target for the next 12 months? Do you know the cost of increasing these and what’s the breakeven point? If you do not know I’ll send you an Excel sheet so you can play “What If”. It’s free just email me firstname.lastname@example.org
The seven ways to improve cash flow and profitability is through Revenue, Cost of Goods Sold, Operating Expenses, Inventory/Work in Progress, Creditors (Money to be paid), Debtors (Money to be received) and Price. Do you have targets and ratios for these?
Build your wealth and profits and enjoy a better lifestyle. Gerald is an international trainer and coach on Sales, Finance, Marketing and Leadership. Sales and Finance often operate in silos and he is passionate about building a bridge between the two so individuals see the impact of their decisions and organisations can enjoy that profitable sustainable advantage.
Please feel free to contact him on email@example.com to discuss how he can help you build on your people’s skills to multiply your revenue and profit