by Rob Joseph, Director, BeaconCFO Plus
What does it take to run a small business?
You might answer that it takes time, energy, and money, among other things.
Now, let’s reframe the question: What does it take to run a profitable small business?
According to one of my more memorable business school professors, one of the key rules of business is, “Anybody off the street can run a business at a loss.”
Running a business at a profit requires you to do many things right. It takes more than time, energy, and money. I would argue that the most important thing you can do is know your numbers.
Numbers are the language of business.
This isn’t just something people say. It’s true.
Michael Dell—the CEO of Dell Technologies—once said, “Anything that can be measured can be improved.” It is a simple statement, but it holds tremendous value for small businesses.
Understanding your numbers—all of them—is the key to running a profitable business. Last month, we discussed the benefits of switching from cash-based accounting to accrual accounting to give you a much more accurate picture of your numbers on a daily basis.
If you know your numbers, you can do many things right. For example, imagine that a key client you have counted on for sales the past two years is now spending half as much, or less, with your company. You can reach out immediately to the client to determine whether something is wrong and if there is an issue you can remedy. You can head off declining sales before you lose a client entirely.
When numbers are trending down, you have an early warning. This gives you and your team an opportunity to determine and take the appropriate actions to stay on track. You don’t have to do it alone.
At BeaconCFO, all of our experienced CFOs understand the value of knowing your numbers. Through our advisory CFO services, we provide you with an accurate picture of your business finances. Think of your outsourced CFO as the doctor reading the chart at the foot of your hospital bed. We interpret and read the numbers for you and suggest a course forward, allowing you and your team to focus your energy on other essential aspects of your business.
When you take strategic, deliberate actions based on your numbers, the profits will follow.
If you’re ready to discuss your business questions and challenges with one of our outsourced CFOs, please schedule your complimentary CFO consultation or reach out to our team. We look forward to helping you revitalize your financial strategies and set your business up for long-term success.