Before we delve in, I *know* numbers make you want to bury your head in a pillow. The creative business owners I work with are brilliant, ABSOLUTELY brilliant. That creative zest for life and business generally makes these women incredibly successful at what they do. I can say that with certainty because I do their books, ha! However, lots of you just don’t want to know about numbers. Totally understandable considering where your zone of brilliance lies – in creativity, strategy and growth. If you’re guilty of moving numbers into the ‘don’t care’ basket, you’re missing out on some juicy details!
Today, I’m breaking it down for you in a non-scary fuss-free way so you can tackle that number analysis with gusto.
1. Income vs Expenditure vs Profit
You’ll probably know this but your income, expenditure and profit are totally different entities. As you can see below, my super talented client has bought in a whopping $1.2m and her profit is $320k. So, get to know your numbers so you can see just how much gravy you’re bringing home.
If you prefer your numbers in a pretty graph, Xero makes it oh so easy!
Say you sell $200k worth of product (go you!) that figure needs to include the cost of your stock. Your profit is the cream on top. Once you’ve paid all of your expenses including marketing, product, salaries and the like, you’re left with profit.
It’s really important to keep this front of mind. Your profit margin should always be above *30% to keep your business viable. If it’s not, don’t fret. You can always play with your margins and expenses.
*This percentage is a guide only, work out what is best for you and your business and the industry you are in. The higher the better of course!
3. Account Watchlist
This needs to be set up in your Xero file (all my lovely clients have this!) but this snapshot allows you to see how you’re tracking with GST, Tax, Super and Wages payable. So many creative entrepreneurs get a massive shock come BAS and Tax season, keeping on top of it keeps the stress down.
You can also add other others you like to keep that creative eye on, like advertising or software!
If you work with me, I can send through a monthly/weekly email letting you know how much you need to put aside for these payments. My clients love this because they don’t need to think about it!
Don’t forget, if you’re doing the bookkeeping yourself these pretty reports will only be as accurate as the info you’re putting in. So if your figures are shonky, your reports will be unreliable.
If you need a hand with your bookkeeping and fancy reports, feel free to book a discovery call. I’d be happy to look at your books and give you what you need to make informed business decisions.