Part 1: Yikes My Numbers!
How To Make Looking At Your Numbers So Much Easier!
Making More Money, Sales
I’ll be devoting a series of articles in January to strategic planning for entrepreneurs. And I think it’s appropriate to dive into the most avoided place first – looking at the numbers!
One of the most confusing pieces for any entrepreneur in creating your strategic plan for the year is understanding how to evaluate your numbers from the previous year. For most entrepreneurs – you’ve been avoiding your numbers for a LONG time. Each year you start fresh, somehow hoping that the revenue will increase, trying to work harder, be more disciplined. But it doesn’t seem to work so well. So let’s stop doing that and instead start by looking at your numbers (deep breath here).
First, you must release your inner critic and blame. Take another deep breath and just let go of beating yourself up about what you could have done, should have done or should have known. Ultimately entrepreneurship is one big learning experience. And one of those learning skills is getting better at forgiving yourself. There will always be things you don’t know or should have done better. The measurement marker is not about how much you did right or wrong – but how willing you are to see the lessons and respond to them quickly.
OK, so let’s hop into the numbers.
- Look at your revenue the past 1-3 years. Is it up? Is it down?
- Then determine the reason for why it is up or down. Don’t make up a story about this or try to guess! The most accurate way to do this is to look at each month individually, comparing that month to the same month the previous year. If the revenue number is different – see if you can determine the reason why exactly. Did someone pay more? Was there an event? A new client? Don’t guess – be a sleuth here and look into the numbers.
- Look at your expenses number from the past 1-3 years. You’ll do the same analysis here. Is it up or down? Look at the monthly layout of your expenses and see if you can determine what caused the increase or decrease. Remember what I said above – no stories or guessing – see if you can find the increases or decreases in expenses exactly. Enlist help from a bookkeeper if needed.
- Take a look at your expenses by category. Are there any expenses that you can cut for the next year? Are there any areas in which it would support you to stick to a budget?
- What expenses will increase for next year? If you plan to increase revenue, you’ll need to increase expenses, especially in the areas of marketing or team. Project what you think these increases might be. It’s OK if you don’t have exact numbers for this part – it’s just a guess and a way of getting you to think.
- Determine your revenue goal for the current year. To learn more about how to increase your revenue – see our RISE Business Academy.
- Option 1: You can do this by simply taking the previous year’s revenue and increasing it by a certain percentage – say 20%.
- Option 2: You can look specifically at what your estimated expenses are for the next year. Then create a goal for how much profit you would like to have (see below). Then work backwards from there. If you want $70,000 in profit and your expenses are $50,000 (this includes business taxes), then your revenue goal would be $120,000.
PROFIT (NET INCOME) AND SAVINGS GOALS
- There are two major parts to your net income – the money you live off personally and the amount you will put into savings (assuming you have already put your taxes into your business expenses number). So you can also start to think about a savings goal here.
Using the example above, you may decide that you want to live off of $40,000 and put $30,000 into savings. So your net income or profit goal would be $70,000.
Keep in mind that I’ve simplified things here and your numbers may look very different on your reports. Use these as a guideline to help you move forward.
OK, so there you have it – the big fat scary numbers part of strategic planning for entrepreneurs. Sometimes the hardest part is just opening your reports and getting started. I also suggest the buddy system here. Invite a friend over to help you get this done, even if they aren’t an entrepre-neur. Sometimes having a friend to help is just what you need!
Enjoy – and remember I’m doing weekly videos on strategic planning in my FB group. Please make sure you are a member so that you can get the full scoop.
PS: Just in case you’ve missed it – I created a brand new 90-day planner for Entrepreneurs called the Breakthrough Planner. It takes all my systems and puts them into one amazing planner – check it out here.