Start Controlling Your Numbers so They Stop Controlling You

Welcome back to the world of financial empowerment, where we dive into the depths of business numbers with a touch of femininity and a dash of fun.

In case you don't already know me, I'm Lucy Starbuck, your guide through the world of small business finance. I'm all about empowering female entrepreneurs (like you) to thrive in the world of business.

In this article, we're going to talk about profit and loss. The profit and loss report is really the key thing you need to be looking at if you want to start to get control of your numbers. The more you can understand what this report is telling you, the more calm, confident, and clear in your business you'll begin to feel. Then, you can make decisions that enable you to achieve your goals from this place. When we know that our numbers are accurate and clean, we can effectively manage the performance of our business. The profit and loss helps us to gain some intelligence about how our business operates, how our business makes money, and how exactly it can make more money.

Know Your Why

We all want to make more money, but it's important to remember that money is the conduit towards a greater goal - it's never the end goal. For some entrepreneurs, they may want to generate a certain amount of profit because they want to buy a house; for others, they may want to send their children to a specific private school. It doesn't really matter what your goal is, but it does matter that you are clear on what your goals are. This clarity helps you to achieve your profit goals because then you can align your actions to help you achieve them.

One of my key missions in life is to move you away from hoping, praying, or getting disappointed, into planning, understanding, knowing, and taking control of your numbers so you know exactly why something did or didn't work. The profit and loss report can help us do exactly that.

Profit and Loss

You may be wondering what a profit and loss actually is. There are three financial reports that we need to be looking at in our business: 1 - The profit and loss statement. 2 - The balance sheet. 3 - The cash flow statement.

Your profit and loss statement is essentially about how much money you earned during a time period. For example, how much money did your business generate in July, and how much money did your business spend through the month of July? Let's say you generated $10,000 of income in July but you spent $8,000 in expenses. Therefore, you made $2,000 in profit for the month of July. Every business owner needs to be across these numbers: how much money did you bring in, how much money did you spend, and how much profit did you generate?

If you're wondering, "Okay, but where do I start?" I have a few resources for you. The first one is if you are brand new to business and you're not ready to invest in Xero or QuickBooks, I have a course called Finance Fix. In this course, I have a spreadsheet that is already built for you, which will create your own profit and loss figure. This is the perfect resource when you're just getting started so you can start to practise looking at your numbers.

Know Your Numbers

1. The Balance Sheet 

The balance sheet talks about your overall financial position, or how strong your business is. So you may make a profit, but you might also have half a million dollars of loans with the bank. This would mean that while you're a profitable business, the business itself is not worth a lot of money because of the huge debt it has.

2. Cash Flow Statement 

The cash flow statement indicates how cash moves through your business. We're always looking for a net cash flow. Effectively, what this shows is that at any point in time there is cash in your bank account. How efficient is the business at generating cash?

3. Assets 

Your assets include how much money you have. E.g., how much money do you have in the bank? How many people owe you money? Do you own any property or other assets? We also want to know if you owe anyone money, or have any other loans to pay off. The idea is to have net assets, or a positive number, which would indicate a strong business.

It's Time to Uplevel

My recent round of my profit planning program, To The Moon, really exceeded all of my expectations. We have nine wonderful women leaning in and educating themselves on financials whilst also finding a group of like-minded women that can support you to actually do what you need for your business to thrive.

I'll be running To The Moon again at the end of this year or towards the start of next year. If you're interested in tapping into the possibilities of your business, holding yourself accountable, and learning how to really utilise your numbers for greater profit, then send me a DM over on Instagram to save your spot. Spots are limited and include 2 x 1:1s with me!

Really getting that kind of heads up as to where your business can go, and actually holding yourself accountable in a gentle way, of course, holding yourself accountable to that, this is actually what's possible for my business. And so, but then learning over time that actually your business isn't always that predictable, which is what often puts people off a profit plan, and being okay with the fact that going, "Oh, okay, well, I said this was going to happen, but actually this happened. So I need to make some tweaks."

Activity 

If you have Xero or QuickBooks, go and generate your statement now and look at your numbers. If you don't have any accounting software, go purchase my course The Finance Fix to get your hands on the spreadsheet.

Final Thoughts

• The first step to making more profit is by actually looking at the numbers.

• Check in on your profit-and-loss statement each month to understand where your income and expenses are at.

• If you're not generating a profit and instead are loss-making, ask yourself why this is. What decisions did you make in business that led to you making a loss this month? And, how can I change my decisions this coming month to turn the business around?

• Be comfortable with looking backwards in order to propel yourself forward.

See you in the next post and look forward to connecting with you!