With online outlets like Etsy and countless other ways to connect with customers online, more and more women are opening up small businesses right from their home. Most small business owners think that if they have a growing client list, that’s all they need to be successful – but that isn’t the case. A jewelry designer client of mine drove themselves into bankruptcy with this thinking. Growing revenues is not enough to avoid becoming a small business statistic.
Measuring business results performance is the key to making money in any economy. It doesn’t matter if you’re a designer, IT consultant, or Ebay seller, you need to know how to do this. Do you drive a car? Would you ever drive it with your eyes closed? Of course not. Then running a successful small business from home requires you learn the basics of how to read your financial dashboard: the Net Income Statement, Cash Flow Statement and Balance sheet.
It matters because every small business owner needs to be able to answer three key questions:
Is the business showing a profit?
Is there enough cash to pay the bills for the next three months?
Are debt levels safe or is the business at risk?
The answers are obvious if you know where to look. Many small business owners have told me that’s the job of their accountant or bookkeeper. Your accountant is not going to run your business any more than your car mechanic will drive your car. Reading the three financial statements on a regular basis is your job because you are the one taking all the risk.
And it’s really easy. The Net Income Statement shows the money in and money out for the entire business. If the bottom line (you’ve heard that expression before) is positive, you’re making a profit. If it’s negative, that a problem that needs to be addressed. I’ve broken down how to tell if you’re earning a profit and given many examples of businesses just like yours in my new book, Accounting for the Numberphobic, showing you the options on how to fix negative profitability if it persists. If you don’t measure it, you’ll never know. That’s why the Net Income Statement is so important.
The cash flow statement is a lot like your personal checkbook; it answers the question if you have enough cash to pay the bills for the next three months. If the answer is no, it’s best to make provisions now before the cash crunch hits. Several chapters in Accounting for the Numbperphobic are devoted to showing you really simple, no-cost ways to increase cash flow that most small business owners have never heard about. I’ve used these techniques in the real world so I know they work.
Last, but not least, the Balance Sheet or the net worth statement for your business will answer the question if the business is carrying too much debt and what to do about it. Remember, your small business is dynamic. Every decision today affects what happens to profits, cash flow and debt levels tomorrow. Wouldn’t it be a relief to be able to know what’s really happening in your business instead of guessing? Winston Churchill said, “facts are better than dreams”. You need the facts if your small business is going to be successful in any economy.
Together, the Net Income Statement, Cash Flow Statement and Balance Sheets are your global positioning satellite for running your business. Learn how to read them and you can steer your small business profitably far more easily for years to come.
About Dawn Fotopulos:
Dawn Fotopulos, is the associate professor of business at The King’s College and founder of BestSmallBizHelp.com, an award-winning blog dedicated to helping struggling solopreneurs. As an experienced entrepreneur and small-business turnaround expert she has rescued hundreds of small business from financial disaster. Dawn has led an accomplished 20-year career in business, working as a serial entrepreneur, vice-president at Citigroup and Wall Street trader. Fotopulos is a certified facilitator in the Kauffman FastTrac Program, and is a CEO leader for the Job Creators Network. An expert in her field, she has been featured on MSNBC’s “Your Business,” at the New York Times Small Business Summit and in Forbes. For more information visit www.bestsmallbizhelp.com.
With most network marketing companies, recruiting others is not mandatory and is just an elective way that you can add additional income to your business. With that said, it is something that you should consider doing if you want to achieve big business success.
When talking to your potential leads you always want to retain your moral & business ethics. These days, I see recruiters telling people all kinds of lies to just get people to sign up on the dotted line. For those type of people, it is all about the numbers and not about the quality.
Here is what you should or shouldn’t be doing:
* Always speak the truth! Never tell people that customers & party hosts will magically find them without them having to do any type of work.
* Never tell people that they can get rich & make millions of dollars in this industry. That is simply not true for at least 99.9% of the people who get into network marketing.
* When giving monetary amounts to your potential leads, always give them national averages…not the sales of the top earners within the company. By only revealing the TOP EARNERS, you are setting up your lead for failure, disappointment and regret once they join your home business.
* Don’t force people to give you an answer RIGHT NOW! They deserve a little time to think about all of the information you have presented to them! If you put the “heat” on them too strongly, you will drive them in the opposite direction.
* Make sure you tell all potential leads that they will have to “work” the business! They will have to put in the time and hard work for it to succeed. Nothing is handed to them on a silver platter, no matter how fantastic the products may be.
* Don’t promise overnight success! It takes a lot of time, hard work & patience for a home business to grow and to succeed! Let them know it may take many weeks or several months before they start seeing the financial success that they want to achieve.
While it is important to go out there and recruit new members to your direct sales team…it is equally important to do it in an ethical and professional way. Team building is a great way to add to your income stream to help you to achieve financial freedom.