The Three Things Entrepreneurs Need to Know About Finances - Profits Prophet

The Three Things Entrepreneurs Need to Know About Finances

As an entrepreneur, you’ve hopefully developed some successful habits that keep your business growing and have also realized that hustling 24/7 is not the same thing as being at the top of your game. A successful entrepreneur is one who has learned to partner with the right professionals, who know how to recognize and break out of a plateau, and who are able to understand that what success means to them might be very different from what success means to others. Even with all this knowledge, though, you still won’t be able to build a really top-level business unless you understand finances. Here are the three things that you need to know about finances to reach a new level of success.

1.    Finances are a Translation of Your Activity into Numbers

At the end of the day, finances are not your gross annual revenue or even your profits. Instead, they are a translation of your activities into numbers. Your finances can tell you how effective your sales strategies were, how well you managed overhead, and if you’re charging the right prices for your products and services. If your finances are not where you want them to be, it’s likely you’re screwing up in one of these key areas. If your finances are on the right track, you may need to double down and repeat some of your most effective activities to boost those numbers even more.

2.    Finances Can Then be Translated Back into New Activities

Once you figure out where you’re succeeding and where you’re lacking, you can then translate your numbers back into the changes you need to make. You can use them to help you respond more appropriately to challenges in your environment, create new sales strategies, tweak your marketing campaigns, or explore new outsourcing ideas to free up your time and focus on tasks that will boost your profit margins.

3.    Finances Are a Daily Act

Many entrepreneurs make the mistake of only taking a look at their finances when it’s truly needed—say around tax time or when they are applying for a small business loan. What they fail to realize is that paying attention to finances needs to be a daily act. If you keep a steady pulse on the state of your finances and how that translates into the activities you should be doing, you’ll never lose track of where you are and where you need to be. This lets you do little course corrections on a daily or weekly basis instead of waiting until things get out of control and emergency measures need to be taken.

Finances don’t need to be overwhelming for entrepreneurs. You simply need to know how to read them, then translate them appropriately. If you’re really struggling in this area, you might need a good coach to kick your ass and get you with the program.

Are you ready to take the next step and build a business that is both profitable and fulfilling? Take my quiz to see what your profitability potential is and how to make it work for you.

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