You may think that all that matters in business is getting out there to find new clients. However, while this is crucial, it’s not the only thing that can have an effect on your company’s bottom line. In fact, being able to manage your company’s resources successfully is vital to success, as well.
We’ve put together a few easy tips to help you get started.
have a strong process
Many new business owners discount the importance of having strong processes. But having a great idea, product, or service, isn’t all it takes to be successful.
- If you sell a tangible product it’s important that you implement an inventory or stock monitoring system.
- Or, if your business is service-based and you need to be able to invoice your clients, find a robust accounting software to help you track your invoices; and one that makes it easy for your customers to pay.
- If you have a website that collects sensitive data from your customers, you may want to have IT monitoring or Technology Solutions as an ongoing partner.
know your numbers
You know that you need a business budget and you probably already do a cost analysis before making any major purchase, but are you missing valuable data?
What are the most important numbers for every business owner to know? We’ve got a cheat sheet for you.
Know your sales numbers on a monthly, quarterly and year-to-date basis. Compare these to your plan to see if you are behind or ahead of your goals.
Revenues less the costs to produce your product is your gross profit. In general, there should be approximately 50% or more of your sales volume remaining after you subtract your direct costs.
Now, subtract the total of your general and administrative expenses from your gross profit, then divide that number by your sales. The result tells you how profitable the business is. If the number is negative, you are losing money. Make sure the number is as good as or better than others in your industry. If the typical profit margin in your industry is 14 percent and yours is 8 percent, then you may not be managing your business as well as your competitors.