The annual accounts you produce don’t give you all the numbers you need to run your business.
You need numbers that tell you how you’re doing and help you navigate your journey as a business owner.
Here are 4 essential numbers you won’t find in your accounts:
- Your monthly personal income requirement
Feeding the mouths you have to feed (your team members, your customers, suppliers) is crucial. But you need to be happy and healthy to be able to do this.
Be clear about the income you need from your business each month. You can then incorporate this into your financial plans and make sure your own financial needs are being met.
- Your monthly ‘Magic Number’
This is the turnover figure your business needs to achieve every month in order to feed all the mouths it needs to feed, including you and those who depend on you. We call it your ‘Magic Number’ because it’s so powerful.
When you know this number, you can track your actual turnover against it. When you reach or exceed it, you can celebrate knowing your business is doing well for all its stakeholders. When you don’t, you have the clarity required to work with your accountant and devise a plan to bridge the gap.
- The % of time you spend doing what you should/want to be doing
You run your own business to have the life you want. To benefit from the increased choices and rewards it can deliver.
A key measurement that indicates how well your business is working for you (as opposed to you working for your business) is the percentage of working hours you spend either:
- leading your team
- working on your business strategy and development, or
- away from your business, doing whatever else you love
Knowing this number puts you in a position to do something about it if it’s not what you want it to be.
- The indicative value of your business
Monitoring how the value of your business is growing is vital for your own happiness. It also helps you know how well you’re doing in reaching the value you need to sell for when you exit your business.
Your accountant should be calculating your indicative business value on an annual basis.
Analysing the gap between your current business value and your target business value should also be an annual conversation.
It’s important that you work with an accountant who provides you with clarity of the numbers that matter and discusses them with you.
Call Clear Vision Accountancy on 01249 712074 to discover how we will help lead you to business and personal success. Or visit our website for more information.
Want to get our news updates and insights for business owners straight to your inbox? Sign up to receive our emails.