What Financial Metrics Matter Most for Your Business?

which financial metrics do you need to monitor

If you’re anything like I was when I got started, the very idea of tracking business financial metrics makes you want to curl up in a ball and hide under the covers. You are not alone! At least 80% of my current clients are scared of their metrics and feel overwhelmed when they think about ‘crunching numbers’.

Yes, numbers can be scary. But there is no better way to get a clear picture of the health of your business than to begin tracking your numbers on a monthly basis. Remember, numbers don’t lie. They don’t sugarcoat. They tell you what’s working, what’s not, and what’s a waste of your hard earned time, money, and energy.

Besides, you’re a mompreneur! You balance parenting and running a business. You can definitely handle balancing a spreadsheet. So, if you want to feel empowered and in control of your business and your life, you will have to put on your big girl boots, pull out your excel spreadsheet, and get ready to crunch some numbers. You can do it, and I have some ideas for you to get started.

This is by no means a definitive guide, but I promise you that keeping track of these six essential metrics will help equip you to make great decisions for your business going forward. We’ll start with the easy stuff, and move on to the more complex material.

The Easy Stuff:

Revenue

Revenue is just a fancy word for the amount of money our customers are handing over to us. Most of us keep track of our revenue because we like this number. It makes us feel good to be able to say: “I made three thousand dollars in sales this month.” If you’re not doing so already, make a simple spreadsheet for keeping track of your revenue on a weekly or monthly basis. Analyzing your revenue will help you see when your best sales season is, what your customer buying patterns are, and a wealth of other beneficial data.

New Clients or Customers

You should track this on at least a monthly basis. Knowing how many new customers you are getting can help you understand if your pipeline is healthy. Did you get more clients this month than last month? How about more customers this year than last year? If your numbers are trending downward, it’s an indicator that something isn’t connecting correctly.

This doesn’t mean you are failing. It could just mean that you need to make an adjustment in the way you market or promote your business. Tracking new customers can help you make an informed decision.

Sales Leads

I ask all of my clients: where are you finding new people? Effective lead generation is absolutely essential to a business’s long-term success. Every month, ask yourself these questions: What are you doing to find new clients or customers? PR? Marketing? Networking events? Partnering with other companies? Social Media? What’s working? What’s not? You want to track this and compare your notes monthly. You can save yourself time and energy by putting

  • What are you doing to find new clients or customers? PR? Marketing? Networking events? Partnering with other companies? Social Media?
  • What’s working? What’s not?

You want to track this and compare your notes monthly. You can save yourself time and energy by putting the pedal to the metal on your most effective forms of lead generation.

If you did nothing but kept track of these three metrics, you would already be on the path to making great decisions for your business. But there are three other numbers I also encourage my clients to keep track of so they can really be in control of their business finances. Let’s call this the bonus round.

Bonus Round

Sales Conversion

Your sales conversion percentage is the number of people who complete the desired action after receiving a special offer. Say for example you offered a webinar. How many people signed up for the webinar? Out of the people who signed up, how many bought the e-book or signed up for your masterclass? A healthy conversion percentage is 20% or higher and depends on what the conversion is.

Customer Retention

It’s always more expensive to get new people in the door than it is to retain the people who are already there. If you don’t have good customer retention, try to figure out what you can do to let existing customers know how much you value them.

Profit Margin

This is really important. What is it costing you to be in business? To figure out your profit margin, subtract your cost of goods sold from your revenue. You should always be left with a positive number.

These six simple spreadsheets will help you take charge of your business finances and make excellent decisions for your business. And if all of this still feels overwhelming to you, don’t hesitate to reach out to me.

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How to Streamline Your Business Finances & Stress Less

Today’s post was inspired by a conversation I had recently with a fairly new member of my Metro Detroit Mompreneurs group. She had just joined, was still very much in start up phase of her business, and had a lot of great questions about recommendations for bookkeeping, invoicing, and financial organization as a business owner.

I decided that would be a great topic to cover with you! I want to help you set some systems in place for your business financials so you can feel streamlined, supported, and organized for the rest of the year. Established systems will benefit you both now and in the long run with growth or scaling in your business. There is absolutely every reason to invest your time, money, and effort into the organization of your financial wellness as an entrepreneur. This venture could save you incredible messes and headaches in the future.

One of the first and biggest things I always talk to my clients about with their finances seems so basic, and yet is commonly never really planned. You need to know how to properly charge your clients and customers. You need to define how to set value to your services or products and how to best invoice and collect money. For any business, it pays off in spades to nail your pricing early on. This can be hard for service-based businesses or businesses that provide custom, specific products, but is absolutely one of the first steps to streamlining your processes. You should develop a rate card. It’s exactly like what it sounds like it is, just a simple card with your prices for your standard items or services that you have to offer printed on it. This will save you the difficulty and mental energy of having to figure out what to charge every single time. Take the time to really organize your thoughts around what it is that you sell and what you feel is a fair value for that. Do you sell your time, advice, or expertise? Consider arranging packages for a set recurring payment once per month for a retainer for certain number of hours.

Once you have developed your rate card, it is important to decide what types or avenues of payment you would like to accept. I, personally, work entirely from digital transactions. Allowing my clients and customers to use credit cards has saved me time, energy, and quite a bit of stress without having to worry about cash, checks or bank runs.

One of my line items is monthly retainers for coaching and I have a rate card printed that I can show any prospective clients. They can simply look it over, pick level of service and see very clearly the price. My workshop rate card is organized with a rate for each type of workshop (1 hour, 3 hour, all day). I even have a rate card established for my in person speaking engagements depending on whether they are all day requiring travel, a local non profit, or simply a keynote. Save yourself some headache and at least write down some standard pricing or price ranges.

Next, you need to get paid right? I thought so! You’ve got to make payments as easy as possible for yourself and your customers alike. As I said, I personally don’t accept any form of cash or checks, only cards. Even when or if I am somewhere in person and selling my books at that event, I use a card swiper such as Square or Paypal! Low fees for myself and it’s just an easy one click, one swipe, and done process!

Even for live events, I suggest considering a service such as Eventbrite. I used this before when I did Mom Biz Coach Retreats and it was so easy and saved me so much stress. The registration system collects their pertinent contact information for you, allows you to provide information to them about the event, travel recommendations, etc. and then you can simply connect your Paypal and they can pay through a beautiful, integrated gateway.

Invoicing and bookkeeping is the last step and is the main reason I don’t use a pen and paper for anything anymore. That awful, piling, necessary paper trail in business was just too much for me. It was hard for me to keep up with receipts, avoid losing things or making accidental mistakes. So for me and my business, the beauty of accepting all payments online is there is a full online account of each transaction, date, amount, etc. This helps me so very much during tax time!

These are some of my favorite tips and tricks for keeping everything as simple, streamlined, and easy as possible. Did I miss something? What are you using that makes running the finance side of your business easy for you?

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In The Zone: The Comfort Zone

In the Zone: The Comfort ZoneToday I want to talk with you just a little bit about when being comfortable may be holding you back from being really successful.  Now it’s perfectly natural for us, as mompreneurs—women who have essentially signed up for two full time plus overtime occupations—to naturally gravitate toward what’s easiest for us.  It’s a way of managing all that’s on our plates, keeping our heads above water, normalizing, maintaining.  And sometimes what’s easiest is also smartest, because let’s face it—when you’re CEO (Chief Everything Officer) of your business and household, the “work smarter, not harder” principle is definitely worth considering!  But there are times that comfort and ease and “normal” (whatever that is!) can work against what we really desire out of life, and we need to be on the look out for ways we let our comfort take precedence over our greater vision.

 

Here are some common ways we get stuck in that comfort zone.  Think about which of these may be true for you:

 

1.  Your habits aren’t serving you.  Okay, moms—admit it—we ALL know what this looks like.  We’ve committed to allowing the children a certain amount of time in front of the TV.  But we’ve had some deadlines we’ve had to make on a project for work… and if we can just eek out a little bit more time from the afternoon… and it’s just this one time… And before we know it, the kids have developed an affinity for the couch and they’re whining and fighting and we really aren’t getting anything done now anyway.  And we do the same thing in business, don’t we?  Little slips can become big problems over time.

 

2.  You want to grow.  Doing what you’ve always done in the way you’ve always done it is not going to work when it comes to personal or business growth.  It will keep you where you are rather than helping you get to where you want to go.  Normal and safe and comfortable is not what you’re shooting for when you want to grow because growing means moving outside those boundaries that currently exist for you.

 

3.  You’re setting goals.  Any time you vow to move toward something new or different (as is the case with a goal), you are, by definition, leaving your comfort zone.  You have to push past what’s familiar in order to get to that goal.  And since goals are set to align with our values and priorities, the temporary discomfort associated with charting new territory is well worth the effort.

 

These are just a few of the ways that being comfortable keeps us from being successful.  Identifying these areas of weakness can help us to head them off at the pass, as we continue to press outward on those boundaries, toward the greater prize.

 

I love to hear from you, so leave me a comment! 

Do you struggle with wanting to stay in your comfort zone?

In what ways is staying comfortable holding you back? 

 

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F-Words Mompreneurs Love

F-words Mompreneurs LoveWhen you say to me wine, I already start relaxing.  When you say girls’ night out, I feel excited.  When you say taxes… But again, they’re just words, right?  And yet words can actually have a lot of power over us.  Well, today we’re going to talk about F-words.  Yes, you heard me right.  F-words—some that we love and… well, some that we as mompreneurs may have overlooked.

 

Here are just a few of my favorite F-words:

 

FREEDOM:  If you’re a mom entrepreneur who has any experience working in corporate America and trying to juggle all that entails, plus raising a family, you know what this word freedom is all about.  You have an appreciation of what it means to be able to determine how you spend your own time.

 

FLEXIBILITY:  What’s a mom, much less a mompreneur, without flexibility?  Flexibility is the ability to spend the day with the kids during a snow day, or go on vacation over spring break.  Flexibility is that tango, that mompreneur dance, if you will, where some days I work and some days I don’t, and really maximizing the time that I have available to me in powerful and efficient ways tailored to my family and business.

 

FULFILLMENT:  Fulfillment is huge.  Let’s face it.  We are some strong, bright women.  This work that we do is not the only thing we could be doing with ourselves.  But we choose this work because in it we find fulfillment; we find something with purpose, something that aligns with our priorities, with things that matter to us.  In this work we find our place in this world, a place of value and significance.  What a powerful F-word!

 

FAMILY:  It is often for the love of family that we start a business so it should come as no surprise that our businesses are often at their very best when we are nourishing and growing our families along with our work.  Learning opportunities abound for the whole family when you own your own small business, not to mention the benefit of added income potential, which brings me to my next F-word.

 

FINANCES:  Granted, this F-word may not be on the top of your list of favorites, but gals, if you are serious about running a business, this is a word we must not overlook. Now this is some medicine of my own I have to take because it doesn’t come naturally for me to want to study the incoming and outgoing of money in my family and business.  But in order to make that money count for the things I’m working so hard for, this F-word is something I’ve got to come to terms with.

 

FEAR:  Fear is like the monster under your bed.  Until you acknowledge it for what it is—probably an old pair of slippers or half-eaten sandwich, if you have kids around—it has complete power over you.  Rather than allowing ourselves to be ruled by the unknown, fear can be an incredible motivator for us in our businesses.  So shine a light into those dark places where fear likes to hide and learn to use this F-word to your advantage!

 

So these were just a few of my favorite F-words.  My hope for you today is that you will find real strength in these words for your life, your family and your business.

 

You know I love to hear from you, so leave me a comment!

What are some of your favorite F-words? 

How have you come to love some of the more “angsty” F-words in your life (like finances or fear)? 

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Is Debt Ever Worth It?

debtIt’s all about the money, Honey.  As mompreneurs, money is just one of those things we have to talk about—whether it be earning money, earning enough money, saving money—or perhaps worst of all, this dreaded question of debt.  Does it ever make sense for a MomBiz owner to go into debt?  Is it ever worth it?  Is there such a thing as “justifiable” or even “good” debt?  And what kinds of pitfalls should we, as small business owners, watch out for in order to successfully use debt—if we choose to—to grow our businesses?  These are some delicate and sometimes controversial questions and while as women and moms and managers of our homes as well as our businesses we know there are rarely if ever one-size-fits-all answers to such issues, let’s equip ourselves with the information we need to make important business and financial decisions that support both our business and ultimately our family’s success.

 

Financial management experts tend to agree that there are three areas that normally constitute “good” or “justifiable debt.”  One such area is a mortgage on your house.  This is kind of a given.  Most of us don’t purchase our homes outright and need a little bit of a payment plan and financial experts say that this is generally good debt.  Why?  The asset appreciates over time.  A second area of justifiable debt is debt with the purpose of getting or furthering your education.  Degrees and certifications geared toward your industry absolutely can be critical to your business because they can open doors for you that you just won’t have access to otherwise.  And the third area of acceptable debt?  Business startup and development expenses.  So there you have it—the experts have cashed in on the subject—but when it comes to mompreneurs I can’t stress enough the importance of evaluation and planning when making that final decision about debt for your business.

 

There are three main considerations regarding the question of if debt is right and worthwhile for you and your business and if so, how to be smart about making it work for you:

 

  1. Consider the timing.  As a mompreneur, you’re not just a business owner making decisions based on what looks good on paper.  You’re a woman with a family—and high standards for that family—so the decisions you make for your business need to reflect and support those standards in creating a successful lifestyle and business.  Do you have a child going off to college? And another who needs braces?  Have you been saving for a very big family vacation that has been on the radar for a long time? All of these are considerations when deciding whether or not business debt makes sense for you and your family.

 

  1. Consider the consequences.  Don’t we say this to our kids all the time?  Well, the same is true when making financial decisions.  There is risk involved with incurring debt and that risk can impact both your business and your family life—so do your homework and make sure you know what you’re getting yourself into.

 

  1. Have a plan.  We are all familiar with the old adage “Fail to plan and plan to fail.”  It’s true!  So often as entrepreneurs we learn the hard way—from our mistakes.  It doesn’t have to be that way when it comes to this issue of debt.  If you consider the timing and the consequences of incurring debt to start-up, grow or develop your business and you do decide that it is a good and worthwhile venture for you, have a plan.  Be crystal clear on how you are going to spend that money and be crystal clear on how you will pay it back.  With careful consideration and planning we can be confident in our abilities to succeed in both our businesses and families.

 

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