Episode 402 – What to Track and WHY to Track it
A lot of business owners either don’t know what is important enough to track and what isn’t, so they end up not tracking anything. A lot of owners go by how they feel like their business is going, rather than actual numbers. The issue is, if you aren’t tracking your business, how will you know if it is growing? Mike is here to clear the air and dive right into what you should and shouldn’t be tracking, as well as why it is important.
As always let’s get the false beliefs that you will have to get over before we dive into the good stuff. One of the most concerning things that Mike regularly hears is “My accountant will handle it.” While accountants are a huge help, you should never completely rely on them for everything. While it may seem obvious to some of you reading this, not knowing the basics of your companies financials can be detrimental. While you don’t have to know every little aspect of your companies financials, if asked about key items such as Sales, Gross Profit, Overhead, etc. you should know or have direct access at any time, and not have to go through your accountant.
Another false belief is that tracking your numbers will be a huge, time consuming issue that will be a huge headache. The reality of the situation is that if you know what to track, then it really shouldn’t be a huge undertaking at all. It may take time to go back though everything but if you stay on top of your books then it won’t be a big deal. If you stay on top of your financials and make sure that you’re only tracking what you need then it should be an easy undertaking.
The last false belief that Mike is going to cover is the belief that tracking your companies financials will just be a waste of time. Sometimes as companies grow they put the thought of their financials on the back burner, but that is actually when you need to track your business the most. People will commonly see their company start to grow and will just assume that the money is in order but that is where you can start to deteriorate. It’s important to keep a close eye on making sure that your employees are getting paid and that you’re keeping good customers that are actually benefiting your company.
Now let’s get into the things that you’re going to want to track and stay on top of it.
It’s important to track PNL, which should include things like Sales, Costs of goods sold, gross profit, expenses, and net profit. Outside of the PNL you should also stay on top of Customer Profitability as well as Client and employee Tracking data. The PNL should help you have an understanding of your business and its expenses, where as the client and employee tracking, and Customer Profitability should help you to know which customers are and aren’t profitable.
If you liked this and would like to schedule a complimentary one on one breakthrough session with Mike himself, head over to www.GrowMyCleaningCompany.com/talk and schedule an appointment today!