You don’t have to be good with numbers to be good at business.

But you can’t just check out of your finances either, even if you do have an amazing accountant or a fantastic CFO.

Because even if you aren’t directly managing those finances, learning how to understand your numbers and what they mean for your business is an essential skill that can change the landscape of what is possible for your business.

How to Make Your Numbers Make Sense

Here are 6 finance questions you can ask to put your numbers into context so that you can understand where the money is coming from and make more informed, more strategic decisions about how you’re going to make more of it.

#1. What is your current profit margin? How much revenue did your company have to bring in to achieve that margin? 

You don’t have to memorize all your numbers, but your revenue and profit margin are benchmarks used to measure business growth. Know where you stand.

#2. What are your most significant business expenses? Are there steps you can take to control, reduce, or eliminate them?

The money coming in is only half of the equation. There are always costs to doing business. Knowing what your costs of business are creates a baseline for understanding how much money your company needs to make to be more profitable.

#3. How much recurring revenue is your company generating?

Are 50% of your customers coming back for more, or is it only 5%? Recurring revenue models help to create more accurate predictions of future sales and identify an important opportunity for growth–your clients have already chosen you. What keeps them coming back?

#4. What are your top-performing sales channels? What percentage of your sales do they represent?

Whether you work in the traditional marketplace, e-commerce, or B2B, you need to understand where your sales are coming from if you want to generate more of them.

#5. What is your client acquisition cost? 

Your client acquisition cost is the measure of how much your company spends on acquiring a new customer. This number combines your overhead, marketing, sales, and labor expenditures into context on a per-customer basis. It is especially important because it can serve as an indicator of growth or a warning flag if your client acquisition cost exceeds the amount of money your average customer spends with your company.

#6. How much of your overall sales do your most profitable products or services represent? What is the return on investment? 

Understanding where the money is coming from is essential to making more of it.  If you want to grow your company and your profit margin, you need to know what services or products are moving the needle.

Make Strategic Decisions that Create Strategic Growth

Instead of memorizing numbers that don’t make sense to you, these six questions paint a picture of your business financials so that you have the context you need to understand:

• How much you’re making
• How much you’re spending
• Where the money is coming from
• What your cost of doing business is
• What your clients want from you
• Which solutions are your clients willing to pay for
• The gaps that need closing
• The opportunities ripe for the picking

Now you have the data you need to make informed, strategic decisions that will make your company more successful, more sustainable, and more profitable.

Financial strategy is a fundamental pillar of any successful business. If you’re a business owner who survived the start-up phase, but you’re still struggling to make your numbers make sense, the Foundations Framework was made for you.

This self-directed, twelve-week course is a three-phase journey in essential time management, financial strategy, and leadership practices for business owners who are tired of cobbling the pieces together. 

Grow your company and achieve your goals by applying the fundamental practices I’ve used to help hundreds of six and seven-figure business owners create more freedom and profitability for themselves.

Join me in the Foundations Framework and learn how to make your numbers make sense, so you can start making real profits.