Ep #81 Protecting the profit - numbers to know and track

Listen to the episode here 👇

In our previous discussion, we talked about increasing profitability in your business. 

Today, we'll dive into the specific numbers you need to know to make informed decisions and grow your business. 

Don't worry if you're not familiar with these numbers yet—awareness is power, and understanding these figures will create room for improvement.

Let’s dive in!

1. Revenue Number

The first number you need to know is your revenue—the total amount of money brought in by your services or products over the last year. Track this as a 12-month rolling number to avoid the anxiety of starting from zero, which can happen when you look at it on a calendar or financial year basis.

2. Business Expenses

Understand the costs associated with providing your services and running your business. These expenses can include rent, salaries, consultant fees, supplies, and software subscriptions. Tracking expenses helps identify areas where you can reduce costs and improve profit margins.

3. Profit Margin

Your profit margin is the percentage of revenue left after deducting all expenses. The higher your profit margin, the more profit your business generates, and the better it's performing.

4. Average Revenue per Client

Knowing the average revenue generated by each client helps identify your most valuable clients and profitable services. This information allows you to focus on what works best and find ways to increase revenue.

5. Client Retention Rate

The client retention rate is the percentage of clients who continue using your services over time. A higher retention rate indicates satisfied customers who are more likely to refer you to others. Keep track of this number to ensure you're maintaining strong client relationships.

6. Cost of Customer Acquisition
   

This number represents the total cost of acquiring a new client, including marketing and sales expenses. Tracking this number helps evaluate the effectiveness of your marketing and sales strategies and identifies areas to reduce costs. Remember, it's often more expensive to acquire a new customer than to sell to an existing one.

7. Average Transaction Value

The average transaction value is the average amount each client spends per purchase. This number helps you identify opportunities to upsell and cross-sell additional services, increasing your revenue. For example, a fitness coach could upsell meal plans and nutritional supplements to increase the average transaction value.

8. Break-Even Point

The break-even point is when your revenue covers all your expenses, and you start generating profit. Knowing this number helps you set realistic revenue and expense targets and evaluate the success of your business strategy.

Taking the First Step:

While it may seem overwhelming to examine these numbers, start with your revenue and work your way through the list. Don't be discouraged if the numbers aren't where you want them to be—understanding them is the first step toward improvement.

By knowing these key numbers, you'll feel more confident making money decisions in your business, using data rather than emotions to drive your choices.

Thank you for tuning in, and if you're not following me on Instagram yet, head over to @IlonkaRossCoaching for more valuable insights and motivation. 

See you next week!

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