We Are In Business, To Make Money
March 11, 2015
We are all in business in order to make money. There’s no escaping that. It may not be the only reason we are slogging away but if we are not making money, we don’t have a business, and we won’t be able to achieve all our other goals. I own a successful virtual assistant business because I’m a great VA, I provide an income for each member of my team, and I solve problems for my clients. My overriding reason for running a business is to make a difference for overwhelmed, superstar small business owners.
Money … finances … has never been an area I’ve focused on. I review my rates every few years, last year I introduced packages and I sit down with the accountant every year but the only real KPI I keep an eye on is my monthly turnover. So, am I making money? This came up in a meeting with a client last week, we were discussing her unbillable hours, and mine, and she had actually worked out her actually hourly rate with all outgoings accounted for. And it was below the minimum NZ labour rate! But, she’s on a journey – with goals and a clear strategy on how to get there so at the moment, this isn’t a KPI she is concerned about.
So, in order to make money here’s some questions you should know the answers to. If you don’t, work them out or talk to your accountant or bookkeeper so you can answer them. I have done in order to write this post. Prework!!
Are You Making Money?
1. How much do you need to take from the business in drawings each month?
2. What was your net profit last year and what is your budgeted net profit for this year?
Last year: ____________________ This year: ______________________
3. How much does each product you sell really cost you?
4. How many days does it take your clients to pay you (average)?
5. Am I being provided with relevant management information that helps make business decisions?
Yes ___________ No _________________ (if the answer is no, how can you get this information?)
Based on your answers above, you can now put a plan in place to ensure you are making enough money to grow your business, reach your goals and support yourself and your team/employees while (or course) delivering the very best service your business is capable of … because good service and making money go hand in hand.
My question to you is how informed are you about how much money you are making?
If you made it all the way to the bottom, thank you for reading! Please comment if you have something to share and if you’d like to receive my weekly blog straight to your inbox, please subscribe here. I’d absolutely love that!