If you are like most women creatives, you are mainly interested in the creative work whether it be design, music or writing. You don’t look forward to checking your financials and may even have a fear of numbers.
Because of your personal and professional responsibilities, it seems like an overload to add financial management to your busy schedule.
Loving what you do is important, in fact, it may be the sole reason you are in business in the first place. However, you need to stay profitable to remain in business and only with the help of numbers, those boring numbers can you achieve this.
In this session, we explore 8 numbers that are critical to your business success as a creative businesswoman.
1. Know Your Margins
Gross margin is total sales revenue minus cost of getting your service or product to the point that you can sell it, expressed as a percentage . The higher the percentage the better.
If you don’t know where you are going, you may end up where you won’t like.
For your business to thrive, you need to set clear and measurable goals. Then work towards achieving them. This can be a monthly profit target or other metrics that focus on your business’ growth.
To help you to calculate your margins, please visit: https://www.omnicalculator.com/business/margin
2. Know Your Business’ Worth
What is your net worth?
Many creatives can’t answer this question because they haven’t given it much thought.
Net worth is what is left when you subtract your total liabilities from total assets. It is found on the bottom of your balance sheet. It is a useful number when you need clarity about your business standing.
Net worth is like a medical checkup, it can expose wrong assumptions. This allows you to fix any problem before it gets out of hands.
3. Know Your Overhead Numbers
From payroll to bills, businesses run on money.
A regular stream of work may divert your attention from overhead costs.
Who cares about overhead when income is regular?
Your Fixed Costs and other Overhead expenses must be tracked in order to escape the “hustling” lifestyle where you are forced to accept some poor jobs due to the fear of defaulting on your financial responsibilities.
Your overhead helps you focus on profit, a more useful measure of business’ success than income.
4. Know Your Sales Numbers
Even if you have a top-notch skill and provide excellent customer service, you won’t make a dime or penny unless people pay for your services.
Create a sales target which covers your monthly financial goals and check if you are on course to meet your target at the end of the month.
Your sales numbers can help you determine if you need to offer more value, extend your marketing to new platforms or scale your business.
5. Know Your Job Costs
You may be charging competitive rates but what is the point of running a business if little to nothing is left after deducting the project’s cost?
The costs of completing a client’s directives must be considered to get a full picture of a job’s cost. Keeping a close eye on your job cost is necessary to make each job worth your while.
6. Know Your Receivable Numbers
Having steady projects doesn’t tell the whole story of your finance. Some clients may delay your cheque by several weeks. And you can’t settle your bills with money owed.
Regularly review your receivables report to update or send reminders to get clients to pay up. If it is not in your bank account, it is not yours.
Follow up as necessary to recover your receivables. You may need to include some upfront payment for future job contracts.
Request a sample receivable report: firstname.lastname@example.org
7. Know Your Liability Numbers
How much do you owe?
Payroll, rent or insurance costs are money leaving your business.
Payroll, insurance, and rent are some of the obligations that must be fulfilled by a business.
Your creditors will come calling when your bill is due.
Track your liabilities and plan for their payment so that you are not caught off-guard.
Request an example liability/payables report: email@example.com
8. Know Your Cash Numbers
Can you run your business without cash?
Executing business tasks, promoting your business or paying bills require cash.
Make best friends with cash as it holds the power for actionable decisions.
To track your weekly cash numbers, the following should be included:
· Weekly cash in bank report
· Bank deposits from clients or customers
· Weekly payroll you need to pay your team members
· Weekly equipment cost
· Weekly overhead cost