Latest / The 3Bz Podcast - Building Better Business / EP162 - You're Looking At The Wrong Numbers

Transcript

EP162 - You're Looking At The Wrong Numbers · The 3Bz Podcast - Building Better Business

• 0:01
  Hello and welcome to the Three BS Podcast where we go beyond
• 0:05
  the numbers and get into what actually makes a business work.
• 0:08
  I'm your host Stephanie Marshall, founder of ABCSUKA,
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  Multi award-winning boutique finance and systems partner.
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  I help business owners who've outgrown the basics bring
• 0:18
  clarity, structure and proper systems into their business so
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  things finally feel in control. If you want more clarity, more
• 0:25
  confidence, and a business that doesn't feel like constant
• 0:28
  chaos, you're in the right place.
• 0:31
  Each week we tackle real problems, answer the questions
• 0:33
  you're probably already thinking, and give you practical
• 0:36
  steps you can actually use in around 15 minutes.
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  So if you're ready to build a Better Business with confidence
• 0:42
  and clarity, then let's go. Hello and welcome back to
• 0:46
  another episode of The Threebies podcast.
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  Your go to place for around 15 minutes of motivation, education
• 0:53
  and inspiration to help you build a Better Business each
• 0:56
  week. If we haven't met before, hi, my
• 0:59
  name is Stephanie Marshall. I'm the founder of ABCSUKA Multi
• 1:03
  award-winning boutique finance and systems partner and I help
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  growing businesses who have outgrown their bookkeeper move
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  from messy reactive finances to clear structured numbers and
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  systems that they can actually use to run their business
• 1:15
  properly. Because I really care about the
• 1:17
  people behind the businesses and not just the numbers.
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  Now, today's episode is one that I wish more business owners had
• 1:24
  heard earlier because this is one of the biggest things that I
• 1:27
  see holding otherwise good businesses back.
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  And it's not for a lack of effort, it's not for a lack of
• 1:33
  clients, not even for a lack of money.
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  It's looking at the wrong numbers.
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  You hear me talk about looking at your numbers, reviewing your
• 1:43
  numbers every single week pretty much on this podcast.
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  If I asked you right now what numbers do you actually look at
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  in your business, most people would say revenue, sales, bank
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  balance, and maybe maybe a rough idea of expenses because that
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  all feels logical. Because those are the most
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  visible, easy to obtain numbers in your business.
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  They're easy to access, they're easy to understand, and they
• 2:11
  feel like enough. The problem is, is that they
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  don't tell you what you think they do.
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  Revenue or sales looks impressive.
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  It's the number that people share and celebrate and talk
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  about, but revenue doesn't tell you how much you're actually
• 2:24
  keeping, how hard you worked for that, or how sustainable it is.
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  You can increase revenue or sales and feel worse.
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  I've seen it happen. More pressure, more work to do,
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  and even less clarity. Now the one people trust the
• 2:40
  most is the bank balance. And if you go back to a couple
• 2:42
  of episodes ago, I talked about the bank balance trap.
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  You open your banking app, you see a number and instantly you
• 2:49
  feel something. One of two things.
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  You tend to feel reassured or stressed, but that feeling is
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  based on incomplete information. Your bank balance does not show.
• 3:00
  Tax building up in the background.
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  Corporation tax if you're a limited company.
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  Income tax if you're a sole trader, Sometimes both if you're
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  a director of a limited company who's also got sole trader
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  income. VAT you've collected but don't
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  own. That's a big one.
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  Upcoming costs that haven't left yet.
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  So suppliers that you've got terms with 30 days, end of
• 3:23
  month, things like that that you've not yet paid for but
• 3:26
  you've already had the goods or services for.
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  And timing differences between income and expenses.
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  What I mean is sometimes you will have to spend quite a bit
• 3:37
  of money to manufacture and create a product.
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  The income from that might be 3456 months down the line.
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  The bank balance is a snapshot. It's a moment in time.
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  It's not the full picture and it's not to be relied upon.
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  For example, if you log on to your banking app and you see
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  18,000 lbs in a business bank account, you think I'm doing
• 3:53
  well. You feel really confident, so
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  you go and invest in that new mentor.
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  You spend on that new merch. You commit to a marketing
• 4:01
  campaign for six months or a sponsorship deal.
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  But what you don't see is 6000 LB of that is VAT, 5000 lbs of
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  that is tax, and 4000 lbs of that is for upcoming costs.
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  And suddenly that 18,000 LB isn't what you thought it was.
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  Now let me demonstrate the opposite.
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  You see £2000 in your bank account, you think, Oh my God,
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  I'm behind. Oh no, that's not enough.
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  You start to feel pressure, you start chasing more work, which
• 4:32
  if you've listened to any episode on the podcast, you hear
• 4:35
  me talk about bad fit clients, that's when it's likely that
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  you're going to bring them on board.
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  You start saying yes to everything that's coming in
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  because you need to make more money, right?
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  And you're making rush decisions because you need to make more
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  money, right. But actually your costs are low.
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  You are a service based business who has paid upfront for their
• 4:53
  software. You have a pot put to a side
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  with your tax saved away from the main account, which is
• 5:00
  something I always advise you do by the way.
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  And your profit is stable. You are making money.
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  So now you're reacting to the wrong signal.
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  Always take a second and think about when you do check your
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  numbers. And if you don't, let's pretend
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  that you do. Are they giving you clarity,
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  confidence, or are they just triggering a feeling because
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  they're not the same thing. And we need to know which side
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  of the scales you are with that. Now, I'm going to talk about the
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  one number that people tend to avoid, and that's profit.
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  Because profit requires a bit more effort to understand.
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  It's not just money in, it's what's left after everything
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  else. And this is where the truth sits
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  on what you currently have to play with in your business.
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  Profit tells you, is this actually working?
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  Am I making any money? Is this sustainable long term or
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  is it going to peak and through with the seasons?
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  And is this worth it? I have a client where I went to
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  sit with them and do their annual tax return and in the
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  last 12 months they made 2400 LB profit.
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  Now if you're working 5-6, seven days a week, 160 hours a week as
• 6:12
  some business owners do, and you're making £2400 in a year,
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  is it really worth it? Profit doesn't tell you how busy
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  you are, how full your diary is or how things look from the
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  outside. I have seen businesses turning
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  over £200,000 even more and still feeling stretched, best
• 6:32
  unsure and not able to pay all their bills.
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  Because once you factor in costs and overheads, inefficiencies in
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  the business and underpricing, the profit isn't where it should
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  be. And that's not visible if you're
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  only looking at the sales figure on the top line or the balance
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  in your bank account. The uncomfortable truth is you
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  can grow your business and feel worse for it if you're growing
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  the wrong way. So you're probably thinking,
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  Stephanie, well, what do I actually need to look at then?
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  Now, I'm not going to over complicate this.
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  That's not how I roll. You don't need 10 different
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  dashboards, 50 different reports and complex apps all over the
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  place. You just need clarity.
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  There are three key areas and three things you really need to
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  understand. Number one, you probably guessed
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  it is the profit. What are you actually making in
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  your business? Not guessing, not assuming.
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  What are you actually making in your business?
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  2 is your costs. What is your business costing
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  you to run? Because costs can creep up quite
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  quietly, not just materials, software, subscriptions and
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  tools. Before you know it, those
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  subscriptions increase every April.
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  So your phone bill, for example, that starts to build without you
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  really realising. And when you put that across 12
• 7:45
  months of the year, sometimes it can be quite an increase.
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  Also, time inefficiencies. What is your business costing
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  you in a time sense to run? Where could things be smoother?
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  Where could things be more streamlined?
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  Where could things take less time and get the same outcome?
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  And three, what's coming up, not what just happened, what's
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  coming? What is your tax bill and when
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  is it due? When is your next back quarter
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  and when is that due? And what upcoming expenses do
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  you have? Do you have a membership that
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  has to be renewed annually? Do you have business rates that
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  are about to jump up? Do you have insurance renewals
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  if you pay annually? Those upcoming expenses that
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  catch you out are the ones that we need to be aware of.
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  And as you've probably gathered by now, this matters even more
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  as you grow a business. And I presume you're looking to
• 8:31
  grow and scale by watching or listening to this podcast.
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  When your business is small, when you're first starting out,
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  you can get away with not knowing.
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  As it grows, you just can't because decisions get bigger,
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  mistakes cost more, and pressure increases.
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  And this is where clarity becomes essential.
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  So the sooner we get this streamlined now, the easier it's
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  going to be for you to grow and scale sustainably.
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  This makes me a little uncomfortable because I don't
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  think anybody talks about this. I'm going to be vulnerable and
• 9:02
  do it. There's an emotional impact to
• 9:04
  this too. As a business owner, looking at
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  the wrong numbers creates false confidence or sometimes
• 9:12
  unnecessary stress. Both are really unhelpful
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  because neither are based on reality.
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  If you're looking at your bank balance or your revenue only
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  that false confidence could catch you out and trip you up.
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  And that unnecessary stress is no good for your health.
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  So what changes when you look at the right numbers?
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  Well, everything starts to shift when you understand your numbers
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  properly because decisions are easier.
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  You've got facts and evidence to make decisions on and be
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  confident in those decisions because there's evidence to back
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  up what's going to happen and what has happened.
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  Your pricing becomes clearer when you fully understand what
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  your costs are. It's much easier for you to
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  price know what you need to do to make a profit.
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  Growth becomes intentional rather than accidental.
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  We're not taking on more work because we're stressed.
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  We're we're growing because we want to grow.
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  And your stress actually reduces because you're not guessing
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  anymore. This is where systems matter.
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  Because once you know your numbers once, that's one thing,
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  but knowing them once, it's not enough.
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  You need consistency, you need visibility and a regular rhythm
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  so you're not starting from scratch every single time.
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  I'd like you to answer this question for me.
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  If you had to explain your business numbers to somebody
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  right now, could you? Could you simply, could you
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  clearly and could you confidently?
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  Because that's the level that we're aiming for here.
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  As with every episode of the podcast there, there is shifts
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  that need to happen mentally, physically, emotionally to get
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  to that next level of your business you need to get from.
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  I look at my bank balance to I understand my business and where
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  it is and where it's going. We need to go from reactive to
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  intentional, and I feel like I say this every episode, we have
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  to stop firefighting. We need to start growing
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  intentionally and not through a panic, and we need to go from
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  guessing to absolute clarity because that's what's going to
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  give you confidence to grow your business intentionally.
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  Your one move this week is to find your actual profit number.
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  That's your homework, even if it's rough, even if it's not
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  perfect. Look at what came in in the last
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  financial year or 12 months, what went out and what was
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  actually left. Because once you know your
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  profit, you will start making better decisions.
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  And by this time next week, you're going to see your
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  business differently and hopefully for the better.
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  So if you're currently relying on revenue or sales figures,
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  your bank balance or what feels about right, this is your sign
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  to change that. Because your business deserves
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  better than partial half assed information.
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  It deserves clarity, it deserves structure, and it deserves
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  numbers that you can actually rely on.
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  If you found this episode useful, please do like, write
• 12:07
  and review. It really does help more
• 12:09
  business owners find the podcast so we can all build better
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  businesses together. And if you want support building
• 12:16
  that clarity into your business properly through better numbers
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  and better systems, that's exactly what we do at ABCSUK.
• 12:24
  The link is in the show notes. If you want to book 15 minutes
• 12:27
  in my diary to have a discovery call and see where ABCSUK can
• 12:31
  help you because after all, your business deserves better.
• 12:36
  Thank you so much for listening. This is a three BS podcast.
• 12:39
  I will see you next week for the next episode.
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  And that brings us to the end of another episode of the Three BS
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  podcast. If this has helped you think
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  differently about your business, then it's done its job.
• 12:50
  Make sure you're following or subscribe so you don't miss the
• 12:52
  next episode. And if you found it useful,
• 12:55
  please do leave a review. It helps more business owners
• 12:57
  find this and start running the businesses properly.
• 13:00
  If you want more insights behind the scenes and the reality of
• 13:03
  what it actually takes to build a Better Business, come and
• 13:06
  connect with me on social media. And if you're ready to stop
• 13:09
  guessing and start running your business with clarity,
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  structure, and confidence, your next step is just click away
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  because your business deserves better.
• 13:17
  I'll see you in the next episode.