Often when I talk with self-employed or small business owners they discuss their business in terms of their 'feel' for it. That makes sense to me since they are involved daily in the actions involved in performing their services or selling their products. However, when it comes to the real numbers, their knowledge begins to fail as they usually have limited resources for this information and thus return to their instincts on how they are doing. When the information is finally organized and put together in a typical reporting style like profit & loss statement or income statement, this is when I see their attention becoming focused.
Knowing not only how much money you are bringing in but where it is going is very important to evaluating the progress and success of your business. Even if you are self-employed providing a service, it is not enough to know you are getting checks in the mail. It is critical to your decision making to have good information available so when you are thinking about spending money on advertising or purchasing equipment, you know if you can afford it or if financing will work for you.
Tracking Critical Numbers in your business (Click on this link for more information)
If you are able to spend some time putting your numbers together you will see how easy it is to really get to know how you're doing and what decisions make sense for you now and in the long term.
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