We could all have a 6-figure launch, if we spent £80k on Facebook ads.
Right?!
That’s what you see all over Facebook, people talking about their launch success.
It’s exciting to think about sales. And I’m sure it’s a number you track in your business.
If you spend any time on social media, you’ll see business owners talking about how much money they’re making. But what figure are they actually talking about? And are they talking about it in pounds or dollars? Because that can make a massive difference.
So in today’s blog, we’re diving deep into the numbers that you should REALLY be looking at. And not just the figures that are, in fact, vanity metrics (which look good and shiny, but don’t mean anything!).
A business owner recently asked me how much money she’d need to be earning, to get the mortgage she wanted for her dream house. We started talking about what the numbers would need to look like.
We figured out that her profit would need to be around £70,000 a year.
She turned to me and asked “Well, how many sales then do I need to make then, to have that at the end of the year? How do I work it out?”
And she’s not alone, because a lot of business owners don’t know their numbers or how to work out what their profit is from their turnover (just look at Dragon’s Den!).
If that’s you too, there is NO shame in not understanding your numbers yet. It’s all a journey – and now is the perfect time to start getting a handle on it all.
Turnover or sales is the figure that everybody concentrates on. The £10k or £100k that’s come into the bank account. But what they DON’T look at is what the profit is from that.
It’s incredibly, incredibly important for you to consider! Simply put, profit is the money left over from your sales, once you’ve taken off all your expenses.
Depending on the business you run – whether you need to buy products or equipment or spend a lot on staff or contractors – your profit margin could be really quite high.
Let’s say you’re selling a product or service for £10,000 (like a high-level coaching package or building and designing websites). If you’re the only person in your business – maybe you work from home – and you’re just paying for the internet, some tech subscriptions and a few other bits and pieces, you might find that for every £10k you make on sales through your business, your profit is £9k.
So for you to have £70,000 at the end of the year, you’d only actually need to sell to 8 clients. If you made sales of £80k, that would give you £70k worth of profit.
Which means you might NOT need to be earning 6-figures, to get the level of profit and therefore the level of income that you need.
On the other hand, if you’ve got a business with larger overheads – a big team, big premises, the cost of stock, specialist equipment and so on – you might need £140,000 of sales (or even more) to make that £70,000 profit. Because by the time all your expenses have come off, that’s the profit that’s left at the bottom.
That’s why it’s called the bottom line. And that is the figure that is the MOST important one to look at in your business.
So each month when you’re looking at your figures, you should be looking at not just how much you’ve sold, but how much you’re spending on stuff and what your bottom line actually looks like.
If you’re wondering where you’ll find these figures…there’s a couple of options!
At the end of the year, your accountant will give you your accounts with your sales or turnover at the top of the page; your itemised expenses underneath and then your profit at the bottom of the page.
But do you REALLY want to wait a whole year, for your accountant to tell you if your business is in profit or not? I didn’t think so (I wouldn’t either!).
One simple option is to track it on a spreadsheet, keeping a record of the sales that have come in and what you’ve spent on expenses.
Or if you’re using online accounting software like Xero or QuickBooks, that will do it for you – generating a Profit and Loss Statement at the end of each month, to tell you what your profit has been.
And that is the number that you need to be tracking. Because there is NO point in making more money, if you’re spending more each month to create those sales…you’re not going to be earning any more at the end of it all!
It’s the reason so many business owners find they get busier and busier (and often more and more stressed), but still feel skint when there’s nothing more to show for it at the end of the month.
Ultimately, we’re in business to make money and to pay ourselves enough that we can live the lifestyle we want. Otherwise we might as well just go and get a job.
Of course, success means different things to all of us. It’s about doing work we love; giving back; having impact and making a difference to the lives of the people we help and serve.
BUT being a successful business owner means running a PROFITABLE business, so that you can pay yourself a good income every single month (even if your sales figures go up and down from one month to the next).
So when was the last time you stopped to look at your profit?
Do you know how much money you’re really making? Do you look at your figures each month, to see what your profit looks like?
Or have you just got your sales written up on the wall or on your laptop, and you get excited as you make more money?
So many business owners find that as their business starts to grow, it’s hard to step out of the role of the ‘worker’ – the ‘do-er’ in your business – into the role of the CEO, the leader, the person who oversees the whole business. If you imagine a large corporate company, like Sainsbury’s or Marks and Spencer, the people in charge at the top have got a good overall picture of the business because they’re not on the shop floor, serving the customers and working ‘in’ the business all time.
And when you’re first making that transition from working in your business to stepping up into being the true leader and director, it can be so hard to carve out that time in your diary.
Which is why I created ‘The Asset Accelerator’ and ‘Magnetic Wealth’ – two different programmes, for people at different stages of their financial journey and their business!
But a crucial part of BOTH programmes includes that monthly check in session.
It’s about giving yourself the time, support and accountability to look at your business figures every month; your assets and liabilities and to make serious progress on growing your wealth.
The time is carved out in your diary. You can do it over lunch with your screen off, eating a sandwich if you want to (although I know you probably don’t take time for lunch that often!).
Once a month we’ll come together and in the privacy of your own room, so you can look at your figures – with a small group of other like-minded business owners, who are also looking at theirs.
You get the opportunity to pick my brains during the session. It’s interactive – you’ve got the option of sending me messages privately, if you don’t want to share your question in the group, and I can then answer it in the group for the benefit of everyone. Because for everybody who asks a question, there’s someone who’s not yet brave enough to ask and this way, your answer helps other people too.
These programmes are both very different because they’ve been created for different people, at different stages of their business journey.
So if you want to know more about either, just click here to drop me a message. And we can have a chat about the best way for me to support you – to truly understand your numbers and track the RIGHT things, so that you can make a real difference in your business and your life.
Either way, I’ll hold your hand, so you feel totally calm and in control…knowing you’ve 100% got this!
Until next time,
Claire