So often I hear small business owners and entrepreneurs say that they’re not good at numbers, they don’t like the numbers or that they ignore them completely. I cringe when I hear this, because I know how important a basic understanding is to growing your business and achieving your dreams.
Strategy Number 1 – Get someone else to do the basic work for you.
It’s not about being a bookkeeper or an accountant. It’s not about having to do the books yourself. You really don’t need to spend time learning how to be a bookkeeper or accountant. The key is to get someone else to do the basic bookkeeping for you. Delegate this work or outsource it. Just find someone to do it for you.
I think one of the reasons people run away from the numbers is that they have been led to believe that it is difficult, that accounting is complicated and just too difficult to even attempt to understand.
Nothing could be further from the truth. Accounting is mostly adding and subtracting with a little bit of multiplication and division thrown in for good measure. There’s no fancy maths, no geometry, no calculus, no algebra, just plain old adding and subtracting.
Strategy Number 2 – Look at specific results.
Now that you’ve got someone else doing the bookkeeping work for you, the next step is to look at the reports that the accounting system produces.
Okay, so I hear you. The reports look like a list of numbers on a page that don’t mean anything to you. I get it. The key here is to identify just a few numbers to check.
Don’t stress yourself about understanding all the numbers. Just pick some key ones, like total income, money in the bank, accounts receivable. Then review them regularly.
Some numbers are well-suited to being checked weekly, like the ones I’ve mentioned here. Others like gross profit and net profit need to be looked at on a monthly basis.
Strategy Number 3 – Put the key numbers in graphical form.
The majority of the population are visual learners, so the easiest way to understand the numbers, is to have them in a visual format.
There are many systems available that you can use and set up to show the numbers in graphical form. A graph is easily understood, you can see whether the numbers are going up or going down and instantly you know whether you’ve got a good result or not.
I’ve been working with a client who didn’t understand the numbers when we first met. Now, she has learnt to love the numbers and has put in place reporting systems that provide her with key numbers on a daily basis. She knows what income she needs to break even and every day is able to check how she’s going.
What’s stopping you? Make a decision today to make the numbers your new best friend.