Business owners face a number of challenges, with the most common struggle being how to manage their finances properly. Whether you’re a seasoned entrepreneur or new in your business, understanding and taking control of your numbers is important for the long-term growth (and health) of your business. 

Here are some tips to master your numbers and build a thriving business:

Get Back To Basics

Business owners can sometimes over analyze their business, constantly thinking of something that is always new and innovative instead of addressing and streamlining what is right in front of them. ‘Going back to the basics’ involves removing unnecessary complexities, evaluating your original business model or plan, and reestablishing clarity on the main purpose of your business.

Have a Solid Business Plan

A solid business plan provides a guideline for achieving your goals, serves as a foundation for decision-making, and helps you navigate through challenges effectively. Whether you skipped this step initially or need to revisit and strengthen your existing plan, here are ways to know if you have a solid business model:

Know how your money flows through your business – Follow the dollar bill like it is on a conveyor belt! This process involves tracing the path of money from where it enters the business to what happens to it afterward. By understanding this flow, you can identify any cracks or areas of improvement that may be affecting the business. 

Do not be afraid of cracks in the business model – A lot of business owners admit that they are afraid of looking at their business model thoroughly to find any cracks. It is okay to be in this position, but know that you need to confront your financial challenges as early as possible. A proper analysis of your business model will help you find the areas that you need to improve on. Then you can have a new model that’s clear and concise. 

Go through your business model in a visual way – Visual drawings can simplify difficult concepts and make them more understandable. By visualizing the business model, business owners can grasp the key components, relationships, and flows within their business more easily. You can tag the numbers later after you have walked through the model in a very visual way. 

Love Your Numbers

Love your numbers and they will love you back. For business owners, it’s not uncommon to have second thoughts on facing your numbers. You may find yourself reluctant to delve into financial statements, budgets, or projections, for fear of what you might uncover.  

Here are some activities or strategies to help overcome any reluctance:

Bring out your current or past set of projections – Bring out any previous projections you may have and compare them with your current financial status. By doing so, you can identify where you may have gone off course. This simple side-by-side comparison can be an eye-opening or an aha moment. You may find, for instance, that your sales are on track but the expenses are not, or vice versa. 

Bring out bank statements and a highlighter – if you don’t have any projections or budgets in place, which is common for many business owners, you can grab your bank statements, preferably from the last three months, and print them off. Go through them with a highlighter and mark and add up different categories of expenses and income. Doing this gives you the opportunity to step back and see the path of money flowing through your business. It helps you identify areas where you may be overspending or missing out on potential savings

Know How to Handle Your Debt

Debt is a part of many businesses, it serves as a means to finance growth, expansion, or overcome temporary financial challenges. Debt is described as a necessary evil, it is never great to have any kind of debt. But the thing is, you can make debt your friend – if you have a plan for it. The only way that you can pay for your debt is through profit, and how do you make a profit? Through your business model! Again, this all goes down to your business model. 

To maximize your business to be as profitable as possible, it becomes crucial to reassess and refine the business model. Analyze the cost of generating income and identify areas where profit can be enhanced. By thoroughly understanding the inflow and outflow of funds, business owners can make proper decisions about pricing strategies, cost management, and resource allocation. The aim is to strengthen profitability, and ultimately create a sustainable way to pay debt. 

Learn From the Professionals 

Learning and listening to professionals and seasoned business owners when it comes to managing your business and finances can have significant benefits for your overall success. You can learn a lot from their expertise and experience in this field. They have likely encountered various challenges and opportunities in business and finance that you may be facing at the moment. You can do this by reading books made by professionals, listening to podcasts, reading blogs, or appointing a consultation with one.

Conclusion

Mastering your numbers is really essential for your business to thrive. Many business owners are scared of facing their numbers, and it is something that needs to be overcome. If you are currently having a hard time with the finances of your business, the first thing that you need to do is to go back to the basics. Remove any unnecessary complexities that hinder you from seeing the bigger picture of your business. Keep in mind that taking charge of your finances is a continuous process that involves continual analysis, adjustment, and learning. So don’t be afraid of your numbers – face them, understand them, and allow them to direct you in the direction of success.

Inventory encompasses the stock of raw materials and finished goods a company maintains at any given time. As an asset, inventory serves as one of the backbones of any business, and it is crucial for every business owner to manage their inventory correctly as it can directly impact the cash flow, operations, and customer satisfaction. So, new and seasoned business owners, let’s dive into this and let’s give you the super Profit First tips on how you can efficiently manage your inventory. 

What is Inventory?

Inventory refers to the collection of goods, materials, or products held by a business for the purpose of production, distribution, or sale. Different businesses have different types of items in their inventory. For example, food businesses would have raw ingredients and packed goods, while clothing businesses would have inventory full of apparel, accessories, seasonal clothing, and many more. In general, inventory items range from raw materials, work-in-progress items, and finished goods. Proper inventory management reduces the risk of stockouts, spoilage of materials, and dissatisfied customers. 

Tips On Managing Your Inventory

Managing your inventory can be challenging, even seasoned entrepreneurs face challenges with inventory management. As your business grows, the more complex your inventory will be. There are factors such as unexpected shifts in customer demand, issues with your suppliers, or market fluctuations that need constant adaptation of inventory strategies. 

Here are tips on how you can manage your inventory and be a master of it. 

Have a separate account for your inventory

It is better to maintain separate bank accounts for specific financial purposes. The five foundation accounts are profit, owner’s pay, tax, operating expenses, and implementation. Having just one checking account for everything gives you a false belief that you have so much money, and business owners tend to spend that money thinking that they have a lot. What then happens is that you don’t have enough money to buy inventory, and then you would have to borrow money to pay for the inventory. The thing in Profit First Nation is “When in doubt add an account”, the more accounts you have, the more clarity you have about what is the cash purpose. By allocating a specific percentage of income into your inventory account, you can ensure that there are enough necessary funds to replenish your inventory.

Assess the profitability of each product you are selling

Not all inventory items are created equal in terms of profitability. Some products earn more and have higher returns, while others may earn less. It is important to assess the profitability of each product to identify the winners and the underperforming items. Once you have assessed this, you can invest more in the items that sell more and get more profit. 

Keep track of inventory days

Not all items in your inventory can last for a long time, especially if you are in the food business. You always need to consider how long the current stock will last. Make sure that you do not have so much more than you need, or too little. Running out of inventory can result in loss of sales, if you don’t have that item, your customers are going to look for that item in a different store. If you are an online seller, you can lose your place in the rankings if you are not selling enough, and it can take a lot of money to build yourself again. 

Be creative in removing underperforming items in your inventory 

There are ways where you can get rid of your big stocks of underperforming items that you don’t need without having it all go to waste. Some business owners decide to donate perishable items to food kitchens, there are others who make deals to sell their products for wholesale prices to resellers. There are a variety of things that you can do to get rid of products, just ask yourself “How can I get something back out of this and the product still be beneficial to someone else?”

Advertise within your means

It is essential for businesses to connect their advertising efforts with their inventory levels. You cannot keep on advertising a product that you do not have enough inventory of. Make sure that you connect the dots between your advertising spend and your inventory so that you are not spending more dollars on something that you are not going to be able to deliver in a timely manner. 

Another thing that you need to keep an eye on is the return on your advertising spend or what is called the Media Efficiency Ratio. You can calculate this by taking the dollars that you are spending on advertising, and dividing it by the revenue that you are getting. The primary objective of advertising is to increase revenue. Businesses must not lose sight of this goal, if your advertisements are not giving you revenue, then maybe you should think of other ways or other strategies that will work for your business. 

Conclusion

In conclusion, your inventory is one of the backbones of your business and it is crucial to master its management. Proper inventory management impacts cash flow, your operation, and customer satisfaction. Always monitor your products and have more winning and in-demand items in your inventory, if you have lots of items that are underperforming, there are many ways to get rid of them while also not letting them go to waste. Advertising for sure is a good way to get your products more attention, but do not forget to keep track of its media efficiency ratio. Remember to just spend within your means. Proper inventory management is a continuous process that requires different strategies in different stages of your business. 

In small business ownership and entrepreneurship, It’s easy to become so immersed in the pursuit of our dreams that we neglect the very vessel through which those dreams are realized: ourselves.

Time to get grounded and ready to bring in your last quarter without taxing your biggest asset – your well-being.

If you read Profit First, you know that I did not take this advice when I first started out.

This isn’t new news, but I have some additional lessons to share from that time period.

Once upon a time, I had it all.

Then I lost it.

Now, I wouldn’t have avoided this crisis if I had taken care of myself, but if I had focused on my well-being more, I would have managed everything way better and it may not have gotten so dark. Protecting your well-being isn’t just a method to get you through the day, but also through a crisis. Years back, I lost my business. My house. My pride. It was taxing on my wife and kids, and my mentality. In retrospect I realize that if I had been in a routine of taking care of myself in the first place, that I would have fared better as a person.

I’ve come to understand that achieving my goals requires not just ambition and hard work, but also a strategic approach to maintaining my mental and emotional well-being. I want to share my insights and experiences on how to avoid burnout while treading the exhilarating yet treacherous waters of the entrepreneurial journey. Here are a few things that I haven’t talked about much:

Prioritize self-care: I know, zzzzzz. You’ve heard it before. “Self-care” gets thrown around constantly. But maybe there’s a reason. As entrepreneurs, we often put our businesses first, neglecting our own well-being. Remember, you are the heart and soul of your venture. Dedicate time to self-care activities that rejuvenate you – be it exercise, meditation, reading, or spending quality time with your favorite people. Just as your business needs nurturing, so do you.
Set realistic boundaries: Boundaries are essential, both for your personal life and your business. Define your working hours and stick to them. Create a dedicated workspace to ensure a clear separation between work and leisure. Setting boundaries not only prevents burnout but also enhances your productivity during working hours.
Embrace delegation and outsourcing: Clockwork that business of yours! As entrepreneurs, we often wear multiple hats, but trying to do it all can lead to exhaustion. Embrace delegation and outsourcing. Focus on what you do best and delegate tasks that can be handled by others. This not only relieves your workload but also empowers your team and fosters a collaborative environment.
Continuous learning and growth: Just as your business evolves, so should you. Invest in your personal and professional development. Attend workshops, and conferences, and engage in online courses to stay updated and expand your skill set. Continuous learning not only keeps you engaged but also prevents stagnation, a common precursor to burnout.
Cultivate resilience: The entrepreneurial journey is paved with failures, setbacks, and challenges. Resilience is your armor against burnout. Instead of viewing failures as roadblocks, see them as stepping stones toward growth. Cultivate a mindset that embraces setbacks as opportunities for learning and improvement.
Practice mindfulness: Yep – me again with the mindfulness lecture – because it’s now the cornerstone of my happiness. In the chaos of entrepreneurship, practicing mindfulness can be a lifesaver. Mindfulness techniques, such as meditation and deep breathing, can help you stay present, reduce stress, and enhance your decision-making abilities. Taking even a few minutes each day to center yourself can make a world of difference.
So whether it’s in your storage room massage chair (see scary video above), a walk through the woods, meditation, reading a book, sleeping, or time with a loved one, promise me now that you will take time today to recharge and hit that reset button. Then, and only then, will you be clear for take off.

Remember, you’re here for the long game. Preventing burnout is not just a necessity; it’s a strategic imperative for any entrepreneur aspiring to build a sustainable and impactful venture.

Nurture yourself today, and then make it a daily habit.

Wishing you health and wealth always,