As a business owner you have a lot on your plate. You’re juggling the operations of the business in addition to doing what you do best. You may have become involved in human resources, managing employee relations. And don’t forget about sales and marketing. Growing your transactions is a key component in the future success of the company. However one thing that gets lost in the day to day operations is having a pulse on the financials of the company.
Don’t be the business owner that is happy as long as payroll is being covered. Don’t be the business owner that doesn’t fully communicate with their bookkeeper or CPA. Be the business owner that fully understands their numbers and how they all link together.
Understand that Money Mastery is broken down into several areas.
Break Even Mastery shows that you fully understand that point in your business when you become profitable. What your operation costs are and how much of your products or services you need to sell each day to cover these costs. Mastering the knowledge of your break even on a yearly, quarterly, monthly, weekly and daily count can be very powerful. Understanding these numbers will give you the ability to forecast how much profit you want to produce and how much revenues you need to produce to deliver that outcome.
Next is the Profit Margin Mastery. Knowing this allows you to know how many customers you need, and at what cost, to hit your revenue goals.
Once you comprehend how much you need to make to cover your costs, the number of customers you need and at what rate, you will have focus on mastering Cash flow. This one is a bit trickier because you will be observing the revenues that are coming in, plus maintaining your outgoing payables. You might even have to play bill collector here to ensure cash is flowing in.
Lastly you will be concentrating on Reporting Mastery. Tracking each one of these areas, including the costs, income, payables and profit margins will give you an overall understanding of the company’s revenues. This is necessary so that you can tweak your processes and procedures and recognize areas for improvement.
Remember that your business will be declared successful when it can work without you in it, and that includes properly managing your financials. Having Money Mastery will allow you to take that dream vacation and have peace of mind that the money is still rolling in and being managed, even without you!