If you’re using accounting software, it’s easy to run financial reports. But what then? There are so many numbers to look at; it can be overwhelming. Which ones are the most important to monitor the health of your business? Which numbers should you track to ensure that your business grows?
Most of my clients started their business because they’re amazing at what they do, but they’re not business people by training. So while they know exactly how to make their clients happy, they’re winging it on the business side of things. Unfortunately, this is a risky practice. A massage therapist I know recently had to close up shop and go back to working for a big spa. She is incredibly talented, and her clients loved her. But she was so focused on serving her clients that she never looked at the big picture of her business. Suddenly she didn’t have enough cash to pay the bills, and she didn’t know how to salvage the situation.
I believe that she could have avoided this worst-case scenario if she had paid attention to the financial side of her business. In fact, to show you how she might have avoided the outcome, we’ll look at how others businesses stay profitable and growing by tracking five key business numbers. A quick disclaimer — every business is different. Here I’ll focus on a typical service business, but feel free to consult your business advisor or accountant for more customized suggestions.