Successful Owners Know Their Numbers

by Shaun R Smith on December 14, 2010

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It may not be what you want to hear.  It may not be sexy, or exciting, or fodder for a best-selling book.  But I was thinking about this yesterday morning and then asked a networking business friend if she shared the same view.  She runs a bookkeeping company, and between the two of us we’ve got over 30 years of experience with hundreds of businesses.  I share this idea I had that all successful business owners know their numbers and she agreed immediately.

You Don’t Have To Be an Accountant

You don’t have to be an accountant or bookkeeper to run a successful business.  In fact, I know very few business owners who have that type of training.  Most are great at marketing or selling, and some get there by being great operators.  The books might not even be in great order.  Any messiness or lack of systems will definitely slow you down or stunt your growth, but even in those circumstances the successful owner knows the critical metrics.

The Critical Metrics

Depending on your business, what the metrics are might vary.  Gross revenue, gross margin, net profit, and breakeven are almost always among them.  What industry you’re in, what stage of growth you’re at, who’s on your team, and other unique characteristics to your business will determine what other critical metrics to watch.  Some examples might include:

- Outgoing calls per week

- Inventory levels

- Incoming calls per week

- Foot traffic

- Proposal turnaround time

- Accounts Receivable

- Cash on hand

- Customer retention rate

- Number of incoming referrals

And the list could go on and on.

Start Measuring and Tracking Today

If you don’t already know your numbers cold, don’t worry about picking the right critical numbers to watch.  Start with the main numbers I listed above, and go from there.  If you are you know your basic numbers inside and out, start asking yourself, “what are the main drivers of my business,” “if I were on a desert island, what information what I want faxed to me,” or “if I could only watch one number this quarter, what would have the biggest impact on my bottom line.”

Numbers Are Your Friend

Numbers are the scorecard for your business.  They let you know if you’re off course, and can give you a lot of information about how to stay on course.  Ignore them at your peril.

Photo by: Luis Argerich

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