MODERN FINANCE
acknowledging them and deciding to
act on them she can find comfort in
them, knowing that she will be able
to pay her bills, her team and herself
if she stays on track.
If Tina takes it a step further and lets
her team know the numbers it means
they understand what the business
needs to make and are motivated as
well by a clear target and action plan
to get there.
has struggled with the rising costs
and the pressure of making sure
everyone is paid, including herself.
When I suggest taking comfort in the
numbers, Tina laughs and says she
tries to avoid looking at them.
So how can Tina use the numbers to
increase her cash flow and reduce
her stress?
1. First Tina needs to know her
expenses. These total $250,000 per
year or $4,807 per week
2. Next, Tina works out she wants to
be paid $1,250 per week to cover her
personal living expenses and give
her a buffer
3. Together steps 1 and 2 total
$6,057 per week which is the
minimum amount of income the
business needs to make to pay bills
and Tina’s wage
4. Next Tina needs to look at what
the business’ current income is and
what the gap is between currently
weekly revenue and step 3. So if
revenue is currently $5,000 per week
she needs to find an extra $1,057 per
week
5. Tina can break her numbers down
further into the number of new
customers required, number of leads,
conversion rate, average client spend
and average hourly rate per fee
earner. Once she’s done that, she can
put action steps around what she
and her team needs to be doing each
week in order to chase the figure of
$6,057. Tina now has an amount she
can monitor and action items she
can measure and be accountable for.
The numbers side of your business
may never be something that comes
naturally to you. That’s certainly
not what I’m promising. However
what I do know, through personal
experience and from working with
hundreds of clients over the years, is
that knowledge brings power. With
power comes a sense of control
and often that alone is enough to
alleviate tension and provide relief.
Which is a truly comforting thought.
How does Tina find comfort in a
figure like $6,057? By knowing the
minimum amount the business
needs to generate, she has certainty
around what she needs to make each
week in order to pay her bills and
meet her goals.
Of course, she now needs to create
action plans around how she is
going to meet that sales figure and
to measure and monitor what she is
doing regularly to make sure she is
on track. But she can find comfort
in knowing that when she regularly
achieves that figure, she can relax.
By avoiding the numbers, Tina is
stressed about the unknown.
By recognising the numbers,
Melissa Browne is a money and
business strategy expert and founder
of A&TA and The Money Barre.
Melissa works with small and medium
business owners to save tax, grow their
business and reduce their stress. She
is the author of More Money for Shoes
and Fabulous but Broke. For more
information visit www.byata.com.au or
contact [email protected]
July 2016
ModernBusiness
33