Numbers Every Entrepreneur Needs to Know to Grow Their Business

When I first meet with a client to talk about marketing, I always need to know a few numbers that are critical to making effective marketing decisions. So I ask questions like…

How many client, customers and/or sales do you need to hit your sales and revenue goals?

What’s your marketing budget?

What are your current gross revenues and expenses?

Unfortunately, more often than not, small business owners can’t answer these questions for me. They might have an idea of how much their business brings in each year. But most don’t have any idea what their expenses are. And far too many entrepreneurs don’t track even their revenues and expenses monthly.

The thing is, if you don’t know a few basic numbers related to your business and your marketing, you are flying blind. Because there is no way to know how much to spend on marketing, or what’s working and what’s not.

Plus if you don’t know where you are or where you’re going, the chances of ever hitting your business, sales or income goals (assuming you have some) are slim to none. While the chances of going out of business are pretty large.

If you don’t know your own numbers, don’t despair. As I’ve said, this is true for far too many entrepreneurs—particularly solo-entrepreneurs. And there are a host of reasons for not having a handle on this.

Maybe you haven’t really looked at the numbers because you don’t know what to look for or at…Or you’re a terrible record keeper…Or you’re simply afraid to see the true status of your business.

Whatever the reason is, there is no time like the present to get a clear picture of your business financials.

So I’ve put together a series of questions you should be able to answer about your business. If you’re new in business just do the best projections you can with the information you have available.

1. What are your current annual and monthly net revenues (gross revenues – expenses)?
    
2. What are your net revenue goals and are you on track to meet them based on your current gross revenues and expenses?
    
3. What’s your current marketing budget?
    
4. What’s been your most successful marketing tactic based on Return On Investment (ROI = Gross sales revenues generated – time & money costs of implementation)?
    
5. What’s the average value of one new client or sale?
    
6. What’s the annual value of a client or customer (average value of one new client or sale X average # of annual sales per client or customer)?
    
7. How many sales, customers or clients do you need to meet your goals (gross revenue goal / total average sale)?

Congratulations! If you’ve answered these questions you now have a much clearer picture of where your business is today, where you’d like it to be, and what you need to get you there. You also have a way to track the results of your marketing efforts so you can make good decisions and market your business effectively down the road.

I highly recommend answering these same questions every six months to make sure you’re staying on track.

To make this easier, try using bookkeeping software like QuickBooks to track your financials monthly. That way you can easily generate reports to show you exactly where your business stands at any time.

You can absolutely learn to do the basics yourself (invoicing, accepting payments, writing checks, etc.). But it’s best to have a bookkeeper set up your software and show you how to use it properly.

Then get out there, do some amazing marketing, and make your business soar!

Are you able to answer these questions? How has knowing these numbers helped you? Any other thoughts on this? Please do share by leaving a comment…