As a small business coach here in San Luis Obispo, I work with lots of small business owners that tell me they are just not making enough money. Financial success takes the effective coordination of the many hats we wear as a business owner.
The big three are: Managing our Money, Marketing, and Operations.
If any of these areas are not getting the job done, our financial success is at serious risk. I often get asked “Where do I start?” and I always say, “Money, of course!” It all boils down to sorting your expenses into three categories:
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Have to
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Need to
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Want to.
My very first question is going to be about your personal financial floor. This number follows the model above; how much money do you “have to” have in order to pay your rent, buy your groceries, and keep gas in the car. How much do you “need to” pay for insurance, utilities and all the other stuff you need to run your household? How much do you “want to” spend on vacations and save for retirement or college for your children? Now we have a working number for your personal financial floor.
We ask similar questions about what it takes to run and grow our business. Be sure to add in something for taxes (I know, yikes). These two sets of numbers add up to how much revenue your business needs to generate.
I can hear you saying, “So, how does this help me make more money?” When we do this exercise – in writing I might add – we now have the measure for how much money we really need, then we take this number and calculate what it looks like per day. This is where the magic occurs; our performance changes all by itself. We know at the end of each day if we hit our number or not. If we did not, we can do better tomorrow. We will start asking questions about the effectiveness of our marketing and the efficiency of our operations and we will suddenly start to see the areas where we can do better.
Your financial success is directly tied to your performance and your performance is driven by knowing your numbers.
Every one of my small business clients in San Luis Obispo county who has embraced knowing their numbers has seen a shift in their performance and significant improvement in how much money they make. What would it mean to you and your family if you could double, triple, or even quadruple your income?
Knowledge + Performance = Results!
