On our online business course, we do the finance bit, and this is where there is no information for anybody, anywhere easily accessible to figure out how to count the beans in their business.
So, three simple headings to help you understand how best to count things from a central pot of truth to steer your course forwards.
Before the three things though, the central pot of truth is essential.
Make sure the finances that you’re counting are actually accurate and make sure you have a system within your world to get the right numbers in the right place right now.
Once you have that you can count the following:
1) Cash – this is turnover. “How much money came through the till today?”
2) Cost of sale – this is variable costs. You only have to spend these when you’re doing the work on the person who came through the door.
Variable costs are different to fixed costs, you only spend them if you do the work.
3) Overheads or fixed costs – you spend these whether you do the work or not. Paying your rent and your heating and the wages, that’s a fixed cost.
You have to cover those costs first because you always have to pay those, then you have to cover the variable costs of the sale that you’ve provided and then what’s left is profit.
Everybody who works in your business has to contribute to the costs and everyone can have a detrimental effect.
If you have someone working with you for example an associate dentist in practice, not only must they cover the fixed costs of their surgery, but they must also cover the variable costs of their sales which includes their own wages. After that there should be money left and you should decide what that is.
If you don’t know what that is then you need to count it better.
Blog Post Number - 3013
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