A guest post from Angela Smith at Lifestyle Tradie!
If you’re a business owner like us, you’d agree there is plenty to learn about business.
That said, there are 3 basic things you NEED to learn and apply if you want to succeed, but funnily enough, too few business owners apply what we are about to share.
When we ask a trade business owner ‘do you know your numbers?’, the answer is often ‘Of course!’.
That is, until we ask specific questions like;
- What’s your gross profit for the week?
- What’s your breakeven per month?
- Are you on track to hit your target profit margin for this year?
“What!?, What!?, What!?”…. as we watch their eyes glaze over in confusion. Is this your response too?
Well, you’re not alone.
Far too many business owners have never been taught the importance of watching their numbers. They’ve never been taught ‘what’ to look at, or ‘when’ to ensure you are on track and hence in control.
It leaves them feeling lost. Out of control. Powerless.
It means they’re making decisions on gut feel.
Not backed with fact.
A recipe for disaster!
If you want to understand completely what is happening within your business, claim back the driver’s seat (instead of sitting in the back seat, or worse, the boot), then perhaps you need to take a different approach within your business.
One thing is for sure; MONEY matters are of top priority.
And understanding all three basic areas – ‘PAST, PRESENT, and FUTURE’– are of utmost importance, but let me explain what I mean….
Let’s use a metaphorical car trip driving from point ‘A’ to point ‘B’.
- Your PAST, is the condition and history of the car. The mileage, maintenance history, petrol consumption, and more. It provides the history of the vehicle, how it copes on long trips and hence provide the data to support the prediction of how your trip will go.
- Your PRESENT, is what is happening right now on the trip between points ‘A’ and ‘B’. Today. The water levels, speed you are driving, petrol remaining and more.
- Your FUTURE, is the actual decision to arrive at Destination ‘B’. It is your conscious decision to drive a certain route to arrive in less time, or perhaps a scenic route to experience the journey. Either way, you need to consider the different elements – the time it will take, cost of the petrol, condition of the car, stops along the way – to ensure you reach your final destination.
Without reviewing these different stages in isolation, there is little hope of arriving at Destination ‘B’. The reality is, there would not have been a ‘B’ to start with. You would have literally been driving around aimlessly. That being said, it puzzles me as to how business owners think they can get from ‘A’ (business start-up) to ‘B’ (business success), without the same consideration.
Let’s take a look at this within your business. When it comes to the ‘PAST, PRESENT, and FUTURE’… what should you be looking at with and without your accountant?
To explain, we developed ‘The Financial Focuser’ below.
You can see in ‘The Financial Focuser’ that you should be looking at your PAST & FUTURE reports on a yearly, quarterly, and monthly basis.
In terms of the PRESENT, you should be looking at specific financial reports on a weekly or daily basis.
This is where understanding each of these reports in isolation is really important to you and the success of your business.
It’s a good idea to lean on your accountant to understand what the reports mean and how to read them, then take control of doing this based on the frequency we recommend.
Only by looking at these financials regularly, will you be able to understand your business inside and out.
How can you make serious business decisions if they aren’t based on financial cold hard facts? And the only way to know the facts is to understand the reports in the right time frame.
Oh, and if you’re saying to yourself ‘but my accountant costs a fortune!’, think about the cost to your business right now because you don’t know this stuff.
So what are you waiting for? Book in a meeting with your accountant to discuss your PAST, PRESENT, & FUTURE before it’s too late.
Trust me when I say you won’t regret it.
If you want to understand more about ‘The Financial Focuser’ and how to take control of making money in your business, then join us at our live event ‘Next Level Tradie’. We’re going deep on this subject to help trade business owners. Click here for more details and to grab a free ServiceM8 ticket.
Husband and wife team, Andrew & Angela Smith, are the co-founders of the award winning Australian business Lifestyle Tradie Group. A membership to inspire, energize, connect and educate tradespeople and their partners, Lifestyle Tradie is dedicated to helping trade business owners fast-track business and lifestyle success!