In my Business Coaching practice, we break the evolution of businesses down into 6 steps. The first of these steps is Mastery. Mastery itself has a number of components. There is mastery of money, mastery of self, mastery of time and mastery of delivery of your product or service.
Mastery over money, or Financial Mastery, is critical to the health and growth of your business. Everything else hinges on this component. If you don’t have a clear understanding of your business financials, you will be lacking the key tools for making sound business decisions, and all other areas of your business will suffer.
Mastery over the fundamentals of the financial health of your business is a great place to start.
a) Break Even Mastery – Know the break even point in your business… how much product/service do you need to sell each day to cover costs
b) Profit Margin Mastery – how many customers at what average dollar sale allows you to hit your profit goals, or alternatively, knowing the profit margins on your different products or services
c) Cashflow Mastery – understanding the cash movements within your business and how those movements affect the decisions you wish to make. This includes maintaining management over your receivables, your payables and your collection procedures; and
d) Reporting Mastery – the habit of regularly producing reports on income, costs, margins, receivables, payables and cashflows
Each of these fundamentals of Financial Mastery are a good place to start to gain control of your business and work towards the next steps to success. As your business grows, these numbers will change, so you will want to review and update them regularly to know where they are at daily, weekly, monthly and annually. It may seem like a lot at first, but if you get in the habit of reviewing them regularly and default time into your schedule (Time Mastery), it will become a simple routine task.