There’s a fairly common theme when talking to entrepreneurs about business. They don’t like to talk about their numbers. Their sales figures, conversion rates, web stats, and heaven forbid asking them to talk about “Profit Margin”.
It’s almost like we have our head in the sand.
If your business is making money & you’re feeling balanced, read no further. Just jump down to the bottom and leave an encouraging comment for the others here. You’re a fabulous ambassador for entrepreneurs!
But if you need to pull your head out of the sand for a few minute today, keep reading!
Are you seriously having FUN in your business?
But if we’re really serious about this (and yes, business can be fun, I’m not talking about taking the fun out) we’ve got to look at the numbers. We’ve got to measure and analyze, so we can make smart decisions.
How else will we know if we’re moving forward with a business project, product or plan which simply isn’t working for us.
And in the great big picture, I don’t think any of us really wants to create a business (even it’s something we’re wildly passionate about) that isn’t making any money, right? We might be able to convince ourselves we’ll “carry” the business for a few months or years. But in our dreams, when we conceived of this idea, there was a real desire for the business to give us the Freedom to do what we love.
Not chain us to computers, or continuously providing services that wear our bodies out, leaving very little money to do the fun things. Or what about extra money to reinvest in the business, or go to an industry seminar to learn new things & make business connections to build your business faster, stronger, better?
Profit Margin and other boring words! Yawn!
Yes, I know this stuff makes your eyes glaze over, and want to take a nap. But once you get the hang of it, you might even start to look forward to it. It’s actually quite empowering.
Take a few minutes and think about where you wanted your business to be at the beginning of the year. Is it ‘pulling its weight’? Or are you still investing personal funds from time to time, in order to keep it afloat.
Consider breaking it up into segments of your business. Are there parts of your business that are making money, and other parts that are not?
Take a Good Look
Take the time to LOOK at where your money is coming from & where it is going. Money likes to be focused on, and they say that what you focus on expands. And then take a look at where you’re spending your time, and other energy. Is it balanced?
I’ve included a little snapshot as an example. It’s a snapshot “story” of a consultant who is selling two products and two services and is working on something new. She is making money from all of them, which is great. But it can be distracting for her. She’s really passionate about her “other” project (in this example) and has been working on it now for nearly 6 months. She’s spending a lot of time promoting it, but when we looked a little closer we can see it’s bringing in less than 5% of her total revenue over the past 6 months, and she estimated spending over half of her time focused on it. (Did you also notice she’s worked 70 hours in her business this past week? Not uncommon. Would you do this for an employer and only bring home $200?)
And I can’t help wondering why she doesn’t spend just another 5 hours each week on Service #2, and bring in another $667/month. She tells me she’s not that interested in anymore, but wouldn’t it make sense, instead of continuing to struggle?
I’m not writing this blog today to make you sad or depressed. Sometimes looking at these numbers will show you how “ON TRACK” you really are. And maybe even remind you that it’s okay to take a break, go on that vacation you need, or simply have a picnic in the park this afternoon. In fact, do something FUN anyway! Your mind will be clearer and you’ll feel inspired to work on creating a big strong business (even if it’s a one woman show!). A business that will have an easy flow of money, a purpose, and something others will look at and say, “I’m inspired to be an entrepreneur too!”
Are you an Ambassador for Entrepreneurship?
As an ambassador of entrepreneurship, I can’t help but wonder what damage I’ve done to other dreamers. Ones who were sitting on the fence, when they witnessed me struggle. Does it scare them away from potentially living their dream? Do they say, “I’ve always wanted to, but I’d rather have my steady paycheque”, after seeing me on a rollercoaster ride. Or see me struggling to balance the work with fun.
I’m guilty of it too. I stick my head in the sand, especially when I’m passionate about a new project, program, client project that I think will lead me to something “so much better”. I’m an optimist!
Take a look at your numbers today. Even if it’s scribbling something on the back of a piece of paper while
you’re reading this. Leave me a note below to let me know how it feels. Did you have an “ah-ha” moment? Can you see where you have some extra time to go for a picnic, out for coffee with friends, connect with someone who may be a potential client for one of your higher profit margin products/services?
Have fun in your business. Don’t take it so seriously, but at the same time, be serious about making a profit, and living a good life!
It’s true that looking at the numbers can be empowering. I’ve found that by having my bookkeeper send me reports, it’s easier for me to sit down and take a look, especially when it’s scheduled in my calendar.
It’s funny that you write about head in the sand, Loralee. I was preparing for a session with a coach (me getting coached by her) and one of the questions was of income. Though I’m generally aware of where I sit, when I added up the numbers for this year, I was surprised–they were higher than I thought! I put so much pressure on myself to keep going, do more, etc, that I hadn’t done a reality check lately to see that things were going well!
At the same time, preparing for that same coach, I was also thinking about how grateful I am to be an entrepreneur. I get to decide when and how I work. I get to have fun and goof off (and sleep in late if I need to–like today!).
hahah! I remember when I first started I was terrified to look at money and I was definitely not in a place where the money was flowing, but as soon as one of my mentors told me I had to have a healthy relationship with my money.
So now I have a date with my money. This is one advice I always give my clients to have a date. Pick a day in the week as your “date night.” Grab a glass of wine or juice and light a candle, play some soothing music and have your date.
Appreciate what you have made…have gratitude for what you have been able to purchase and see where you can possible move things around or spend your energy in your business.
Love this and always a great reminder for self to follow own advice. LOL!
xoxo
Alara Castell
Your Sassy Spiritual Guide
http://alaracastell.com/
Thanks for the reminder, Loralee, I have done this exercise a few times before, but still have a tendency to ‘avoid the numbers’ as long as possible even though I know how eye-opening it can be. Thank you for stating it so clearly and remembering to look at the big picture and have fun along the way!
I think the cool part of this is in creating something you look at every week, and not just every once in a while. It becomes something you look forward to. Monitoring the changes, seeing the growth. I’m especially enjoying this in the other areas I mentioned at the beginning too. Website stats have become a recent favorite. And you’re so right! It does help us see the big picture. Thanks for popping in to the conversation. Loving this dialogue. ~ Loralee
Great post and loving reading the comments. There’s a clear theme coming through – you aren’t focusing on the numbers and profitability which is scary but all too common. Even a simple spreadsheet to see and track your incomes vs expenses is a great start. As well as this use Freshbooks to track your time spent on projects, like Loralee’s example above and see just how much time you are spending on activities that aren’t making you any money. It’s so worthwhile!
I just start my business so I don’t have the numbers to tell which one is make more profit. Right now I’m only record the process how I go with everything and I should start recording the time invested as well while I’m building my business so I can compare them with the income in the future. Thanks for the suggestions.
Loralee, great tips in here and you have reminded me to return to my profit plan. I created one and then quickly forgot about it. Although I do my Quickbooks entries weekly so they don’t build up, I don’t really track the overall picture. I could stand to integrate weekly goals of some kind into my business practice. You say: “Money likes to be focused on.” Yes! Do you set any weekly or quarterly goals yourself? Do you have any examples you can share? Or any specific suggestions you can offer? I think I avoid this in part because I don’t really know what to do.
And I love your chart that tracks both income and time invested! That is a powerful combination. Thanks for this post. You are a true Ambassador for Entrepreneurship. 🙂
Great article! I have a profitable business and yet I still resist the numbers. And yet when I actually sit down and look at last month and then make a project for next month, it’s amazing how quickly I “find” money and hit my goal.
It’s true that looking at the numbers can be empowering. I’ve found that by having my bookkeeper send me reports, it’s easier for me to sit down and take a look, especially when it’s scheduled in my calendar.
Since I am at the start of my business this give me a lot of information to focus on as I progress. However even for my tasks and projects now I think it is a great idea to see where and what I am spending my time on and if that is going to be a wise choice for the future for me. Thanks again for always providing great information.
Good to hear. My ‘new biz’ is so new its not even online yet! I have learned so much from everyone that unfortunately (haha!) I WON’T be able to keep my head in the sand much! I soooooo appreciate this ‘head’s up’ (i love my unintended puns!) as I go into my launch. So I can keep my eye on what is REALLY bringing in income and what is just causing me to spin. The trick will be to differentiate what is art for me and what is business. I need my to do art for ‘art’s sake’ as much as I need business for money. I think when I can be clear about that, then I won’t try to eek money out of the wrong projects!
Thank you, for your wisdom, Loralee! Lovin your posts! Learning so much! xo
In some ways this is even better than the alternative Kathleen. You can set up little reminders & routines to focus on this early on. And in no time you’ll be enjoying it so much you would never consider putting your head in the sand. And maybe you can also take a look at your current situation, see where you’re spending your time in relation to what will be generating the most revenue in your business – in the future. Spending a tiny bit more time on that one area may in fact bring your business away from “new” status faster than you might have imagined. Just a thought 🙂
Loralee,
I have been so busy creating that I haven’t had time to look at the numbers. Perhaps I haven’t wanted to either. I would have to say that my head is in the clouds right now, not in the sand. But, I still don’t know how profitable my new business is. I will put this on my “to do” list. 😉
Thx,
Heather
In the clouds! Love it! I spend a lot of time with my head in the clouds too Heather.
Oh, and you don’t need to make this a huge “to do list” item. Simply give it a bit of focus every day (even a minute or two). It’s well worth it. Have fun with this ~ Loralee
AHA!! What you focus on expands… no wonder I have so many great pairs of shoes. Just kidding (sort of).
Really, that sentence is a total eye opener for me. Last week I finally got around to setting up a separate bank account for my biz, and have an appointment with my friend to help me set up quickbooks. I’m excited to hammer down some of the numbers so I can better see where I should focus my time and energy.
Profitability is the quickest path to FUN, and sometimes, being flexible about what IS working right now to bring in the money is important.
oh shoes! I’m getting rid of my “Stuff” this month to go on adventure. I used to focus on finding FAB things I could give as gifts at networking events. And I literally have boxes and boxes of gifts I still haven’t given away. No point moving them into storage. But yes, what we focus on expands!
Congrats on setting up a separate account & asking for QB help. It will most definitely empower you to make fantastic business decisions Emelie! Fun stuff ~Loralee
I love your picture of the Ostrich and unfortuantly that is me. My big aha is to take my head out of the sand and focus exactly where my money is going. And where my energy is going. I don’t mind numbers yet I don’t spend enough time paying attention to it. Thank you for your post and reminder.
I kind of like sand, honestly! 🙂 It’s warm, and feels great between my toes (but not my head). Have fun Claire!
“Money likes to be focused on” – that is so true and such a great reminder!!
And while I love excel sheets and have a pretty good overview over my money – for some reason I never added the hours into the equation – thanks for this tip!
Anja