As an avid fan of Shark Tank, I anxiously tune in each week to see Ken O’Leary rip the entrepreneurs to shred usually for one reason:
They don’t know their numbers.
As an entrepreneur and small business owner, you’ve got to be clear on your numbers or KPI’s – Key Performance Indicators. You know, those metrics that tell the real story of your business’s success – or lack there of.
Sadly many entrepreneurs haven’t a clue about what they need to know and track in order to validate the existence and profitability of their business.
Let me just say that there are MANY performance indicators you can track. At the end of the day, you want to focus on using your metrics to tell your story of three things.
- Cash flow – this is the amount of cash coming in and going out of your business and includes your ability to manage expenses successfully.
- Profit – this is the amount of revenue that is left over after all expenses have been covered and accounted for.
- Business wealth and value – this is your increase in value each year, well above your personal salary and profit.
And let me just say, so many entrepreneurs get frustrated at the thought of even knowing what KPI’s are. That’s why I wasn’t surprised when I got Michelle’s question:
Hi Darnyelle. I fear that instead of running a business for the past year, I have been building an expensive hobby and it’s really starting to eat away at me. I know that building a business is a huge undertaking and I have no idea what I don’t know. I happened to be out networking earlier this week at your suggestion from a previous episode and I overheard a conversation from two REAL CEO’s talking about KPI’s. What in the devil is a KPI and how can I learn if I have them in my business?
Check out my response to Michelle in this week’s episode of Incredible Factor(TM) TV.
In order to read your financial story, you have to focus on three things:
- Income Statements – this is your financial scorecard.
- Balance Sheets – this shows what you owe, what you own and your net worth after all is considered.
- Cash Flow Reports – this shows the cash that comes in and goes out of your business on a monthly basis.
Now, I realize that I may be making you nervous just by talking about these things BUT if I am, then your business’ viability is definitely in question….
If this post is making you slightly uncomfortable to the viability of your business, perhaps a business breakthrough strategy session is in order? See our consulting options for more information.
So, what say you? What’s your two cents? Do you know your numbers (KPI’s)? Are you creating these three reports and reviewing monthly so that you can adjust strategies to strengthen your numbers and position? Please tell us below by leaving a comment right here – this is where the Incredible Factor TV after party goes down.
©2013 by Darnyelle A. Jervey. All Rights Reserved. Darnyelle A. Jervey, MBA, The Incredible Factor Speaker, Business Coach and Marketing Mentor, is the founder of Incredible One Enterprises.com, Incredible Factor University® the Leverage Your Incredible Factor System® a proven step-by-step program for more clients, more income and more leverage in your business. For more information and a FREE audio CD “7 Critical Mistakes Entrepreneurs Must Avoid When Unleashing Your Incredible Factor So You Attract More Clients, Make More Money and Gain More Leverage” just fill out the form below.
