Remember growing up how you had to have a “favorite” everything…
Favorite color. Favorite Animal. Favorite Food. Favorite number…
That one is my personal favorite… the favorite number.
Having a favorite color makes sense. It’s pleasing to you visually and maybe makes you feel something when you see it. And having a favorite food and animal also makes sense. One has a taste that you either really enjoy or hate and one has a personality, esthetic (i.e. cuteness), and ability (i.e. can fly).
By how the h*ll does one come up with a favorite number? Maybe when you were a kid it was your favorite soccer player’s jersey number?
Well, because we’re adults now – I say we establish a new favorite number.
And that number is… YOUR ENOUGH NUMBER! Remember? The one I talked about last week?
Well in order to discover this number, which will soon be your favorite number, you must know your numbers.
In my Wise Money Business School, we get real with numbers. Believe it or not, most of the 6 and 7 figure business owners who enroll in the program do NOT know their (financial) numbers.
A few reasons:
1. They’ve been conditioned to only think about top-line Revenue
- (and stats that are attached to Revenue – like –)
- Number of New Leads
- Number of Conversions
- Number of Sales
2 . They think running and looking at the financial statements of the business (P&L and Balance Sheet) is the job of the bookkeeper and CPA
3. They don’t want to know the TRUTH of how the business is really doing… The belief is, “as long as I can drive up Revenue, all my business problems will be solved”
Here’s the Truth – it’s your job as an entrepreneur to know your numbers – and I mean the numbers reflected on your business Profit & Loss, Balance Sheet, and Cash Flow Statement. These are ALL of the numbers and in business – every number matters!
That is – if you want to generate a healthy profit and pay yourself a lot of money for all the hard work and risk you’ve taken on to be a business owner.
You see, it’s easy to hide behind big revenue and sales numbers.
TRUTH: Making a 6 or 7 figure top line doesn’t mean you’ve made any money!!
Wait what? Yes – Let me say that again – making $1,000,000 in your business doesn’t mean YOU made any money!
How do you know if YOU made any money?
Well, you look at your bottom line (minus all of the money you “reinvested” into the business to hit the 7-figures).
You see in business (and household for that matter) you start at the bottom and work up – not the other way around!
One of my favorite quotes is | Revenue is Vanity – Profit is Sanity.
This quote is the reason why we love to brag about our 7-figure business but feel totally stressed about money all the time!
Just like weight loss, you have to know where you are starting from and know what your reasonable targets are for success. You must know your numbers and your gaps and come up with the business strategies and budgets that bridge the gaps to hit the bottom line number.
As a Business and Money Coach & Consultant I’ve found that successful entrepreneurs are Quick Starts with creative personalities. Most have shiny object syndrome and are on to the “next thing” before protruding a return on the first.
It sounds something like this: “…oh well, the podcast didn’t work (hit our revenue targets) so maybe it’s a social media plan (let me hire that”) “… oh, the social media plan didn’t work, maybe it’s a new Funnel (let me hire that)…” “… Wow it wasn’t the funnel, maybe I need to write a book (let me hire that)…”
The belief is: I can “buy” revenue and success and if I find the right “buy” then I’ll be in the money!
So, they keep spending (too much) money by usually not paying themselves or putting more money into the business that is mistakenly considered “reinvesting” in the biz. ← this is the financial formula for burnout, deeper biz debt, and hypocrisy (where we give the public illusion that we are doing better than we really are).
But the lethal mistake is this…
Entrepreneurs love to create and are good at “creating” top-line revenue – but THEY HATE LOOKING AT THEIR NUMBERS!
They don’t. They will look at Sales, Open Rates, Social Media views… but NEVER a P&L. Ever! They assume someone else is doing that since they’ve abdicated the role of money to their bookkeeper and CPA.
Don’t bother them with the Financials of the Business they are too busy teaching, creating, social media-ing, selling, helping, and “growing the business.”
The result of not paying attention to and knowing EVERY number reflected on your P&L is called the business hamster wheel:
- You believe you have to GROW the business to make more.
- To Grow the business you have to SELL more
- To Sell more you have to CREATE more,
- The more you have to create, the HARDER to have to work
- To produce more sales you have to PUT more MONEY IN the business to fund the new idea that should produce more income
- That means more financial risk
- And it means you take less and/or have to put in more
This goes on forever…
At the end of the day, you work (and risk more), and the LESS you have to show for it.
But still, if you ask them about their numbers, they will get upset – it “crushes their vision” they say! 😉
Instead, they hire more people (expensive people), more consultants, more coaches, that somehow will get it fixed – but never mind the numbers. They make so much money top line that they don’t think about profitability. The only money strategy is:
Make more, keep hiring, spending, and making costly decisions.
Truth: The more money you spend, the more money you LOSE. It’s counter-intuitive which is why it’s such a trap.
If you haven’t figured out the conclusion to this blog is 😉 this is it:
THE MOST IMPORTANT THING A BUSINESS OWNER CAN DO IS LOOK AT THEIR NUMBERS (FINANCIALS).
I can’t tell you the number of entrepreneurs who are on my Money Therapy couch (metaphorical of course!).
…on the outside, they look like a huge success with a thriving business. On the inside the business is losing money like crazy, they are going deeper into debt and there are lots of financial problems at home.
They are successful “appearing people” making loads of money but they are not as successful as they think in actual business. Actual business requires that you manage and understand your P&L (for starts).
On the inside of the business,
All those clients helped. All the lives changed. All the time spent. All the programs created. All those SALES and not a penny to show for it!
On the outside,
They look like a huge success with a thriving business. On the inside, the business is losing money like crazy and there are lots of financial programs at home.
If any of this resonates with you, PLEASE get in touch. We’ve not been taught money and business – so, it’s no wonder we are stuck in patterns that are not working (financially). I can help.
And oh yeah, one of the biggest things I’ll help you discover is your new favorite number 😉
Comment with HELP and I’ll come to the rescue.
Make it a kickass day