Am I Profiting Enough to Keep Going with my Website?

Blog JAN11, Issue 3
Part 3 of 4

Analyzing Expenses and Profit and my own Trends.
"Earth - Ground yourself in finding the true way" (Miyamoto Musashi)

Stop everything and figure out where your business is financially right now. If you were told that would you be able to do it? How closely do you monitor your balance statement? All these are very important questions for any business especially when the economy is as unstable as it is and unemployment on the rise. Knowing your business worth or whether you are in the black or red at the moment can save you from making some horrific decisions that can have irrevocable consequences.

The process can seem a bit daunting, but it is vital to know how you are doing in your business. Knowing can drive you, move you and even put you at ease. And ignoring it will not make it go away – especially around tax time. Your business numbers including profit and loss, sales and trends are the main arteries of your business. If you don’t monitor them your business could die.

Being an entrepreneur, I have entered into a handful of business relationships and/or partnerships that have not only ended terribly, have taken its toll on my customer base, financial status and personal life. Some of these could have been avoided by assessing past partnerships and knowing how it will turn out, others could have been avoided by looking at my current numbers and realizing I didn’t need a change as things were growing and going well. The “grass is always greener” or “just do it” without first counting the costs has spoiled many other opportunities for me and many others, when I should have stood by “if it ain’t broke, don’t fix it.”

The first thing you should look into is the right software for the job. Being a web developer I have created my own (if you need one give us a call). However as long as my data entry on current projects, expenses, revenues, etc… are in: at the click of a button I have my balance sheet, profit and loss, sales numbers and trends for the last 10 years. The trick is though – to keep it current.

Armed with this knowledge however I can track things that are important to my business. From sales figures and closing rates to profitability and upcoming hurdles. Knowing where I am also keeps me making the right decisions to fix problems that can alter and drive trends in a positive way. For example, slow sales might mean hiring, firing and/or a product or service adjustment. Rising expenses means seeking lower costs of utilities, finding unnecessary expenditures or abandoning marketing or other ineffective expenses that don’t pay for themselves. If we can determine what has changed, we can influence how to change them.

Of course record keeping is tedious and there is a tendency to overanalyze. However it’s harder to make decisions to fix things after the fact than trying to prevent them beforehand. Since I have forced a few habits such as checking my finances, knowing my internet position, knowing how sales are going and others – my company has sustained itself and overcome or avoided some pretty distressing hurdles in the economy, technology and through changing industries.

Keep analyzing for success. Whether a web developer, contractor, artist, programmer, architect, engineer or whatever service or industry you are in – knowing your position gives you the edge to make the right decisions in critical times that can make or break the next growth spurt or layoff within your company.