According to a 2019 survey* of 500 small business owners in a variety of industries, their top ten concerns are:
|1||Making enough money||54%|
|3||Having enough time for everything I have to do||35%|
|6||Cash flow management||22%|
|9||My competition undercutting my prices||16%|
|10||Whether or not my business will survive another year||15%|
Let’s explore the top concern. 54% say they are concerned about “Making Enough Money.”
How do you feel about that? Are you making enough money?
What would you do with more money? What would you worry about less?
From my 30+ years of digging deep into thousands of business financials and valuing over 4,000 businesses, I have learned this concern is 100% valid.
I have found all businesses (yes, all!) are leaking profits. On average, these leaks total 10%, 20% or even more of revenues, regardless of the size or kind of business!
The most important common root cause is what I call “not running your business by the numbers”.
What do I mean by that?
Running your business using timely and relevant information. It’s not a balance sheet. It’s not an income statement. It’s a snapshot of your key performance indicators (KPIs) produced by your reporting systems showing where your business is compared to where it should be. Just like a GPS.
Are you running your business by the numbers? If not, I bet you are leaking profits! “Making Enough Money” is a legitimate worry and profit leaks must be plugged. When properly addressed, the other concerns on the list above are alleviated or even eliminated altogether.
Stopping the leakage begins with looking at the right data, but what are the proper metrics for you? We recommend getting in touch with your CPA. She or he is the likely expert on what KPI’s, budgets and other metrics are best for you.
If you are uncertain or want advice on how to get started, our experts at JBV are more than willing to explore running your business by the numbers further and prep you for a call with your CPA.
If you’d like our help, please reach out to me directly at KevinJennings@JenningsValuation.com.
For more on this topic, check out this post by companydebt.com
* conducted by OnePoll for GoDaddy