Do you know where your money has gone?
It’s an unfortunate situation but we commonly come across people in our business who aren’t great with money. When you’re starting out there is a lot to learn and numbers are one of the most important things that you need to understand.
Understanding numbers helps you move from hobby to business, truly taking you to the next level. This list is by no means exhaustive but the three points outlined below will help you track your money.
Do you know the difference between revenue and profit – Revenue is the cash generated in your business. It’s the inflow of money from your sales activities. The thing about revenue though is that it doesn’t take into account the expenses associated with running your business. It costs money to make a sale. Profits are the different between your business revenue and your business expenses.
Do you know how to increase your profits – If you want to make more profit there are two ways that you can do this. You can either reduce your costs of doing business at your current levels of revenue. Alternatively, you can increase your revenue holding costs constant. By doing either of these things you will increase your profits. Profit is everything as profit is how you can pay for your holidays, support your family and live the life you want to live – without profits you should probably not be in business
Do you track your expenses and have you looked at reducing them – One of the biggest problems we see is when someone starts out they concentrate almost exclusively on increasing their sales. They want to increase revenue but they don’t think about expenses at the same time. This can often lead to a situation where someone gets excited about the number of sales that they have made – but then they get sad when they find out that they’ve got no money in the bank.
Tracking your money is vital for all business owners. There is nothing more important than knowing your numbers. You need to make sure you are earning more than you spend and that you work towards increasing the gap between what you earn and what you are spending.
Ethical Direct Selling Group has our Business Ethically Events running each month.
We also have the Association conference and awards night which is to celebrate people in the industry and how they are conducting themselves with ethics in mind.
Time to nominate people in the industry for our Awards.