My best business advice without a doubt is geared around figures. Know your figures! For a start, do you know where your leads come from? Do you know your conversion rate for enquiries to customers? That is just a start. What about your KPI’s (Key Performance Indicators)? In a recent survey of Australian business owners, it was clear that less than half actually have and tracked their KPI’s. Plus it was discovered that about 14% of business owners don’t even know what a KPI is. And if that is you, don’t feel bad, there is a good portion of business owners just like you.
Every business will have a different set of KPI’s geared solidly around the business and the industry and industry type. For example, a service business where human resources (time) is a big factor would definitely want to be tracking their percentage of wages to sales ratio. However, if you were a manufacturer, then the percentage of COGS (cost of goods sold) to sales would be something you should be watching and tracking very carefully. For any business with debtors (people they invoice), then beyond a doubt you would want to be tracking your average collection days.
Finally, in respect of knowing your figures, be absolutely sure that you know how to read a Profit & Loss Statement and Balance Sheet for your business. And as importantly, that you are getting these reports at least every month, and perhaps even weekly. You should be monitoring your figures and your business performance so that you know how things are going. If you don’t know your figures, how can you possibly make educated decisions about your business and move forward in a positive way?
If you are unsure of any of this, ask either your accountant, bookkeeper or business coach (or us if you need) as these are people who should definitely be able to assist you. There is no such thing as a silly question … but it’s the fool who buries his/her head in the sand and ignores such critical aspects of their business. Knowing your figures is absolutely the best business advice I could give you!