5 Numbers You NEED to Know in Your Business
Numbers can be a *touchy* subject for so many entrepreneurs, but since we are working to build profitable companies, numbers need to be something you become comfy with more and more. This isn’t a hobby and you can’t grow and scale your business if you don’t know the financial aspect of your business.
If you feel intimidated or typically avoid the numbers - I suggest you take a moment to watch this video on the 5 Reasons You Might Be Avoiding the Numbers in Your Business (LINK) before diving into the below.
You don’t need to be a full blown expert, but you DO need to know these 5 important numbers if you want to run a successful business. Let’s dive into those, shall we?
1. You need to know your expenses. It’s absolutely necessary that you know both your fixed expenses and your variable expenses that it costs to run your business. Fixed expenses are consistent things that you know you’ll be spending money on for at least six months to a year, whereas variable expenses are costs that change from month to month.
2. You need to know your $$ revenue. Girl this is the BEST thing to look at! Figure out what your main streams of revenue are in your business - for example if you have clients on a retainer contract, or the products you sell, figure out what those are and how much you make from each category.
3. You need to know your profit. Your profit is one of the MOST important numbers of all, and it’s a super easy equation from the above two numbers you pulled, Revenue - Expenses = PROFIT. See how simple that is? Your businesses profit should be something you’re ALWAYS aware of, because if you’re bringing in a MILLION dollars, but your expenses are $900K...your business is NOT going to be very profitable.
(Bonus tip: if you haven’t read the book Profit First by Mike Michalowicz order it ASAP!!)
4. You need to know your taxes. This one can also be tied into #2, your expenses if it’s easier and I always like to combine taxes into that equation of Revenue - Expenses (with taxes added in here) = Profit. High-level: taxes are something you pay based on the percentage of PROFIT in your company. REMEMBER you do not pay taxes on the FULL revenue, but on the PROFIT of your business. Your tax percentage will come based on your tax bracket but will generally be around 35% for small business tax. So if you sell something that is $100 (revenue) and it costs you $20 to make (expenses) you pay 35% on $80 (profit) so $28 not $35. Make sense?
5. You need to know your SALARY! Yes girl, you need to pay yourself! I see this all the time with some hella-successful women who are crushing their goals and killing it in their business, yet they don’t pay themselves a salary. Here’s why I think this is important: Entrepreneurship is a marathon, not a sprint, and you need to be feeling and seeing the benefits of running your business as soon and as quickly as it makes sense. Even if it’s a small amount to start, I encourage you to take that step to start paying YOURSELF for all the incredible hard work you do.
Okay, now you knoooow I can’t leave you without an action item, right??? Here’s what I want you to do: Take one step this week to start paying yourself in some way - this is going to be the first step towards paying yourself that salary we just talked about, right? Whether it’s increasing what you’re currently paying yourself or paying yourself for the first time, it’s important to take this step.
If you haven’t already, I would love love love to see your beautiful face in my private Uplevel Society Facebook group where I share tools, tips, resources and even do live coaching there weekly. We’re going to be talking numbers in there BIG time, so this is going to be the place to be if you want to learn more about this aspect of your business. I hope you’ll join us! Click here to request to join!