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How to calculate the most crucial number for your business

Jan 11, 2019

Often the focus in business is all around revenue, but there is one crucial number that service-based businesses need to focus on even more.

Break-even.

Break-even is the minimum amount of income you need to cover all your costs.  It’s the bare minimum number you need to keep your head above water each month.

So how do you figure it out?

Oddly enough, we’ll start with your non-business expenses. Your personal expenses.  While break even is all about the business, we need to understand what you need to be drawing out of the business to look after yourself.  Think of this as your personal break even!

1. Start by writing a list of your personal expenses

These are your portion of the household expenses to keep the house running smoothly. We’re talking mortgage, rent, electricity, telephone, clothing, entertainment, schooling, food. 

If you're already drawing a certain amount out of your business - as a salary or drawings – this is a good...

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Business Financials: Look to the Future, Not Over Your Shoulder

Jul 29, 2018
We have eyes that look forward to where we’re going and whilst some people may say they have eyes in the back of the head, the reality is they don’t.
 
So why is it then, that when we’re looking at finances, we are continually looking backward and not looking to the future? Pilots are at the front of the plane watching where the plane is going, into the future, as they fly us around the world. They’re not looking behind them at where they’ve been. The past is useful and has a place. Pilots use their experiences and lessons learned in the past to help them fly the plane into the future.

SO WE TOO SHOULD BE FOCUSING ON FINANCIAL FIGURES THAT ARE LOOKING INTO THE FUTURE WHILST USING THE HISTORICAL, PAST REPORTS TO GUIDE US.

People in agricultural businesses are great at doing this.
 
Whilst they use their experience over the years, even decades, of growing and harvesting their crops, they are continually looking to the future to make...
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3 Reasons to Change That Will Improve Your Future

Jul 22, 2018

Being comfortable in business may well be an elusive dream to you, but if you’ve been in business for a few years, I’m willing to bet that you have developed your own way of doing things that you’ve become comfortable with.

The classic case I used to see, though not so much anymore, was business owners continuing to use desktop accounting software when they could save literally hours of data entry time and cost by switching to an Internet-based system like Xero.

If you consider the phrase “If it ain’t broke, don’t fix it”, famously used by T. Bert Lance, Director of the Office of Management and Budgets in Jimmy Carter’s 1977 administration in America, then you wouldn’t consider a change at all. But whilst it may not be broke if there’s an easier, quicker, cheaper way to do the same process or job, wouldn’t you want to change?

THREE WELL-KNOWN QUOTES THAT RESONATE WITH ME ABOUT WHY WE NEED TO MAKE...

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What Are Your Business Numbers Telling You?

Jul 15, 2018

For your business numbers to tell you about the state of your business, you first have to take the time to look at them and therein lies the first hurdle for most business owners.

They fear what the numbers might say or know that they won’t understand them or have a mindset that they’re not good at maths and as a result, they bury their heads in the sand and/or abdicate all responsibility to their bookkeeper or accountant. None of these actions will help your business to survive let alone thrive.

I was talking to UK business leadership coach, Andrew Priestley, about how important the numbers are in business and his experience with clients who don’t know the basic numbers. It’s disappointing to me that so little is available to help redress this issue and the reason that I continue to write these blog posts. The more knowledge I share, the more I am helping people to overcome the knowledge gap that is vital for business success.

THERE ARE EFFECTIVELY...

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