Step 1, Step 2: The Money Dance to Know Your Business Numbers
Step 1
I could say, “Here are the key metrics you should know in your business” and send you on your way.
Easy for me, but maybe, not easy for you.
You may even put together some numbers:
- Sales: $2000
- Expenses: $1000
- Profit: $1000
Well done! You have numbers on a report.
Step 2
What’s that? You’d like to know if you can afford to buy a piece of equipment, or even hire an employee?
And you’re hoping those numbers on your report will be a crystal ball? My answer to that?
It depends.
(Spoiler: you’ll hear that phrase a lot from accountants & tax pros, but definitely from lawyers – lol)
Cha-Cha
See, my approach to answering questions is to ask you about “what else”. It’s like the classic 2-step dance.
You: Can I afford to hire an employee? (Step 1)
Me: What else is important to you & your business? (Step 2)
It’s important to do this dance, because it keeps us both connected to the why.
The why you started your business. The why you still enjoy the journey of leading a business.
You & I need to dance our way to understanding where your business needs to grow, in order to understand which numbers really make sense.
I always recommend looking at the top three reports to find those numbers:
- the Income Statement (also called the “Profit & Loss Statement”)
- the Balance Sheet
- the Statement of Cash Flows
Now Slide
After our 2-step & with those reports in hand, it’s time to learn your “Money Dance”.
Your Money Dance is how you get into a regular groove with your numbers.
You set aside some space & time, then get ready to boogie. Your business is your dance partner & here are the steps:
- Step 1: What numbers would you like to know or track?
- Step 2: Why do you want to know those numbers?
- Step 3: Use at least 2 of the top 3 reports to find those numbers.
- Step 4: Reflect
Like any good dance, you may feel uncomfortable or even clumsy at first.
But, with practice, you’ll find yourself dancing along, like Ciara & Missy Elliott in “1, 2 Step“.
To your success always,
Paula
Your Numbers-Believin’, Rhythm-Holdin’, Pebble-Droppin’ BFF
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