At some point in or before high school, arithmetic becomes associated with complexity. That experience often transforms into the narrative, “I’m not good at math.” The seed of that thought takes root, and even in adulthood, many people retain a disconnect between themselves and the numbers that represent their budgets, reveal their profit margins and guide their business planning.
Money is needed to buy goods and services, build dreams and fund retirements. Most business owners want the money to make sense, which means checks in the mail and paid-in-full invoices, but they don’t know the what the flow of money is telling them. Managing business is more than monetizing your talent. It is understanding what the money is saying because money tells a story.
Here are two tips to help you learn your business’ money story:
CALCULATE YOUR EXPENSES
Once the business’s vision is written, it is time to calculate the expenses. Everything has a cost, from the pens labeled with your company name to website hosting and product inventory. It can seem tedious to write out the cost of every needed supply, service or piece of equipment, but knowing how much it takes to start the business will inform how much it will take to sustain it and how much time is required to make it profitable. Allow the numbers to reveal the financial cost of your venture so you know whether you need to save before you launch or apply for a loan. By the way, lenders like seeing numbers.
HAVE A PLAN BEFORE YOU PAY
There are products on the market that can be great for business, but anything that goes unused is not a worthy investment. Prior to paying for a product, write a plan for how you intend to use the tool.
In the beginning, it is common to subscribe to services or make purchases that we think will be the key to our operations. Unfortunately, purchasing is only the first step. Products must be used consistently to have an impact. Periodically evaluate if the product meets your business needs. If it doesn’t, let it go.
The more you understand about the finances of your business, the stronger it can become. Your money is telling a story. What is it saying?