So many entrepreneurs and business owners are incredible at what they do, from being a life coach and helping others to creating products to sell. That being said, they’re typically not the best at keeping track of their profits and keeping their books up to date, and that’s ok! From what I’ve seen a lot of entrepreneurs, particularly in the coaching industry, are very focused on their sales numbers.
Once you’re aware of your profit, that’s totally fine. But a lot of entrepreneurs can heavily focus on the sales and be totally unaware of their actual profit. But how are you meant to know if your business is thriving or just surviving if you don’t know your numbers.
If you’re reading this and thinking yikes that’s me! Don’t sweat it, you’re not alone.
To figure out your profit, the calculation is simple.
Your profit is what you have left after expenses. So many business owners claim these six-figure businesses, but as bookkeepers, we see what their profit actually is.
At the end of the day revenue doesn’t really matter, it’s the profit you want to pay attention to. You could have a 6 figure business and be living paycheck to paycheck if you’re not careful.
Profit is key.
Think about it this way, if your business isn’t profitable, then everytime you make a sale you’re basically paying for it.
No matter how much you love serving others, you didn’t go into business to not make any money for yourself.
To figure out your profit, minus the sales from your expenses, the figure you end up with is your profit!
Focusing on your profit will help it grow!
Don’t treat your business as a hobby or side hustle. Make sure you’re treating your business as a business. Having your personal and business funds mixed together is going to make your tax season really difficult. Separating your business and your personal funds is a necessity!
When you regularly check your numbers and keep up to date then you’ll know which products or services your business offers are making you the most money. This will also help you when it comes to deciding what offers to get rid of.
You can measure the profit margins on each product or service and know which is more profitable and where the weaknesses are in the ones with the lower margins. You can set expected margins and make adjustments with the required expenses or price to meet your goals.
Make sure you’re keeping up with your books monthly, set aside time on the 1st of every month to sit down and fill out everything from the previous month. This will keep you on track and you can see where your expenses are coming from and how much profit you’ve made at the end of each month.
If you don’t want to do it yourself, then it’s just another great reason to get a bookkeeper!
Looking at it monthly is going to allow you to:
- Adjust your prices.
- Make sure you’re not leaking money..
- Lower your expenses.
- Keep track of your profits.
So to summarise, keeping track of your profit is going to help your business expand, meaning less stress and more success.