Essential Numbers for Business Owners
You know when you gain weight, right? Your clothes start to fit tighter than normal, your face gets more plump, and you get out of breath more quickly when going up the stairs or walking long distances. Yet, have you ever noticed that—despite all of this—it’s super easy to ignore our expanding waistlines until we’ve stepped foot on that trusty bathroom scale. Why? Because numbers don’t lie.
We can be dishonest with ourselves, trying hard to convince our inner critics that we’re okay, but the moment that number is staring us directly in the face, we’re forced to admit the one thing we’ve known all along. We are overweight.
Well, the same is true in business. It can be extremely easy to overlook signs that our company isn’t doing as well as we’d like. That is, if we don’t constantly know our numbers. Speaking of numbers, here are the four that every business owner should know at all times.
P&L
P&L is short for your profit and loss statement, which is a financial document that compares the money coming in versus the money going out of the business. Or, as Investopedia explains, it is a record that will “provide information about a company’s ability – or lack thereof – to generate profit by increasing revenue, reducing costs, or both.”
P&Ls are commonly compiled either quarterly or annually. Though, quarterly is preferred if you want a more current big-picture view of how your company is doing financially.
Client Acquisition Costs
Do you know how much money you have to spend in order to acquire just one new customer? If not, you may be paying more than you’d like to grow your client base.
To determine your client acquisition costs, simply add up the money you spend per month on marketing (including both online and offline efforts) and divide that by the number of new clients you get. If this number is too high, you might want to tweak your marketing efforts so you get better results, which translates into lower acquisition costs and higher profits.
Website Analytics
A website is a great way to turn potential customers into paying clients. But the only way you’ll know if it’s doing just that is if you pay attention to its analytics. This includes knowing how many visitors it’s getting, how long they’re staying there, and whether they’re clicking on your links.
Some web hosting providers offer this service and send you the analytics regularly. If yours doesn’t, Google Analytics is an option to consider. This enables you to keep better track of how much users are engaging with your website, and whether they’re converting into tangible leads.
Social Media Numbers
Another gauge for determining the “health” of your business is the number of people who follow you on social media. The more your target audience wants to engage with you on these sites, the better it looks for your company’s future.
Fortunately, there are a few online sites that offer the analytics you need to keep a closer eye on your social media presence. For instance, when you use Narrow, a Twitter growth automation service, they provide the numbers necessary for tracking your performance, even offering data on your target audience so you can tailor your posts more directly to them.
When you keep track of these four numbers—your P&L, your customer acquisition costs, your website’s analytics, and your social media numbers—you can keep your finger on the pulse of your business. This makes it possible to respond more quickly should something go awry, but it also enables you to smile when you can see it getting healthier by the minute.
