Know your numbers
When beginning your start-up journey, there is so much you need to be on top of –your product, customers, marketing, finding staff… the
list never ends. Whilst most start-ups dread the thought of doing their books, staying on top of your numbers is super important for a start-up’s success.
How can knowing your numbers help you?
Knowing your numbers can lead to better decision making. Your numbers will tell you all of these things… and more
- Your sales numbers – Is one product line performing better than the others? Do sales peak in certain months? Are your sales one-off or do you have a loyal recurring customer base? Are you too reliant on a few big customers?
- Your expenses – Are your expenses actually translating into sales? How much are you spending? Are you spending too much or spending too little? Do your expenses peak in certain months? Can you afford to spend what you’re spending? Can you afford to start a new marketing campaign? Should you be renegotiating terms with some of your suppliers?
- Your profit –How much money are you actually making? Some businesses can be making sales, but still be unprofitable. Why? Is that you – have you priced your product too low? Are you spending too much?
- Cash Flow– If you have very little money in the bank, how will you pay your bills?Do you have a lot of customers who owe you money? Are you in the early stages of your start-up and the sales have not yet started coming in? How long will your start-up survive without any cash? Should you be looking for investors or funding? Or are there signs of poor financial management in your start-up?
So how do you stay on top of your numbers?
There are a lot of cloud-based programs in the market which make staying on top of your numbers really easy (and even a little bit fun). Programs like Xero* have automatic bank feeds and credit card downloads, which mean you don’t need to waste time typing out lines of bank and credit card statements.
A good tip is to make sure you continue to do your numbers at least once a month. Some start-ups sign-up to software like Xero and start-out with the best of intentions… and then they get too busy and the numbers get forgotten. If you need help, ask for some. Stay on top of your numbers. Have a look at your numbers each month and use those numbers in your decision making. You’ll be surprised at how good the decisions you make can be.
By Emma Petroulas
Emma Petroulas is Client Happiness Director and Co-founder of Nudge Accounting, online accountants for StartUps and Small Businesses. She also lectures in Small Business at the University of Technology, Sydney.
*At Nudge we use Xero and MYOB Live Accounts