I was thinking the other day, “What the F*ck Does ‘Know Your Numbers’ Even Mean for business owners? “Knowing your numbers” can sound intimidating, and you’re not alone if it makes you anxious. Many business owners feel the same way. But I’m here to tell you that it doesn’t have to be overwhelming (and if you can’t rattle them off the top of your head at the next networking event, don’t lose any sleep over it).

Because it’s less about ‘knowing your numbers’ and more about ‘getting to know your numbers’—building a relationship with your financial data through regular reflection and engagement.

Think of your financial data like a trusted member of your management team. You wouldn’t expect to know everything about them overnight; instead, you get comfortable and more confident through regular interactions. The real value lies in understanding the story behind your numbers, not just memorising figures. This isn’t about impressing others with slick-sounding percentages but making informed decisions that drive your business forward.

I want you to be mentally prepared for developing a relationship with your financial data. Similar to the idea of teaching a man to fish, I don’t want you to focus on ‘what numbers to consider’ but rather ‘how you might consider them’.

Often, the reality is not as daunting as we imagine. We tend to catastrophize and fear the unknown. Facing these fears in a safe space can transform your outlook. That’s where I come in, to guide you through this process with support and clarity.

But first, a quick recap: which figures and where to find them

Just so we’re on the same page, let’s dive into the top five numbers you should get familiar with in your business. These are the key figures that will help you keep your finger on the pulse and make informed decisions:

1. Revenue: This is the total income your business generates before any expenses are deducted. It’s the lifeblood of your business. Keeping track of your revenue helps you understand your sales performance and growth over time.

2. Profit and Loss (P&L): Your P&L statement gives you a snapshot of your business’s financial performance. It shows your total revenue, costs, and expenses over a specific period. The bottom line here is your net profit or loss. Regularly reviewing your P&L helps you spot trends and identify areas where you can cut costs or increase income.

3. Cash Flow: Cash flow is the money moving in and out of your business. Positive cash flow means you have more money coming in than going out, which is crucial for day-to-day operations. Negative cash flow can signal potential problems. By monitoring cash flow, you ensure you have enough liquidity to meet your obligations.

4. Gross Profit: This is your revenue minus the cost of goods sold (COGS), divided by revenue. It tells you how much profit you’re making on your products or services before other expenses. A healthy gross profit is vital for covering operating expenses and achieving profitability.

5. Expenses: Keeping an eye on your expenses is just as important as tracking your revenue. This includes fixed costs like rent and salaries, as well as variable costs like utilities and supplies. Understanding where your money goes helps you manage your budget effectively and avoid unnecessary spending.

So where can you keep a diligent eye on these digits? This article I wrote recently covers the key reports you should be reviewing regularly to keep in the loop. 

A check-in a day keeps the panic away.

Ok, so daily reviews might be overkill, but you get the idea. Once your financial data is in order, regular check-ins are essential. It’s like logbook servicing for your car, where your financial data is the engine of your business. Just as you wouldn’t neglect to service your car, you shouldn’t ignore your financials. Regularly reviewing your numbers helps you identify minor issues before they become major problems. This proactive approach saves you from costly mistakes and keeps your business running smoothly.

These check-ins don’t have to be daunting. Set aside time each week to review your key metrics. Look at your revenue, expenses, cash flow, and gross profit. Are there any unexpected changes? Are you hitting your targets? This consistent attention to your numbers allows you to spot trends, adjust strategies, and stay ahead of potential pitfalls.

Small adjustments made regularly can have a significant impact. Maybe you’ll notice an increase in a particular expense and decide to renegotiate with a supplier. Or perhaps you’ll see a dip in revenue from a specific product line and choose to shift your marketing efforts. These incremental changes can lead to substantial improvements over time.

Regular check-ins also keep you engaged with your business. They reinforce your understanding of your financial health and empower you to make informed decisions. It’s all about maintaining control and ensuring your business is operating at its best.

Sensing some resistance? (And yes, it could be you). 

It’s a common struggle. You might always find something more urgent to do, and the temptation to avoid your numbers can grow as your business expands. But let’s be honest: why are you really avoiding them? 

Deep down, is there a small part of you that knows you can’t ‘unsee’ it once you see it, and that you might be required to take some uncomfortable actions?

Facing your financial data takes bravery. It’s about being honest with yourself. The fear of what you might uncover can be paralysing. We often catastrophise, imagining worst-case scenarios that may never come to pass. But here’s the thing: it’s often nowhere near as bad as you think.

I understand this fear, and I’m here to help you overcome it in a safe, supportive space. That’s exactly what my Financial Power Hour sessions are designed for. During these one-on-one strategy sessions, we’ll tackle your financial data head-on. You’ll have the time and space to unpack any issues and get to the root of your concerns.

Think of it like turning on the light in a dark room. Once you see what’s there, you can navigate it confidently. Your numbers tell a story, and getting to know them helps you take charge of that narrative. With the Financial Power Hour, you’ll transform confusion into clarity, and fear into empowerment.So, let’s tackle this together. No more avoiding. Let’s face your financial data head-on and unlock the potential it holds for your business. Book a Financial Power Hour with me, and let’s start this journey towards clarity and confidence.

Disclaimer: These are yuck and boring but unfortunately a legal requirement for professionals in my industry. So just a reminder, the information contained here is general in nature and you should seek financial and business advice tailored to your own personal circumstances. Which, by no small coincidence, I can help you out with. Head over to my website and book a free 15 minute chat with me: https://betterbusinessdecisions.com.au/