Do you know your numbers?

On the Creative Freelancer LinkedIn Group, I asked  if members "know their numbers" -- meaning what you owe, what you own, what you spend and what you earn. (This came out of an interview I did with Galia Gichon, of Down to Earth Finance, who will be speaking this June at the Creative Freelancer Conference.)

But no one answered my question, which makes me think the answer is "no."

Then I saw this article yesterday, which emphasizes that small businesses who know their numbers are most likely to succeed.

So I ask again, do you know your numbers and if not, why not?

Comments

[Joshua Miller]

Hi Ilise,

Yes. I know our numbers. I've known some friends who get so engrossed in the work for clients that they have a hot mess of financial records. I have found that I have to actually "schedule" in time on my calendar to devote to my accounting/finances so that I always know how much I'm bringing in, spending, and what I need to do to get more projects coming in to keep the bills paid.

It really does help if you schedule it in as if it were a project for a client.

[Matt Rhodes]

Hi Ilse,

Thanks for the encouragement to be better about knowing your numbers. Since I started following you I have definitely shifted my mindset from being a designer who owns a business to focusing on being a business owner first. As a solopreneur, I keep my own books using Freshbooks (www.freshbooks.com) which has a P&L report along with several other helpful reports. I check them regularly now to see where I'm at financially. As Joshua says, you've got to schedule it in.

As for cash flow, I'm much more strict now about get one-third (or even one-half) payment before starting a project. I used to be more laxed in this, but now that I regularly check my financials, I've come to realize that this is essential for maintaining a positive cash flow.

Thanks for posting the NYTimes article. I'd agree with him to stop whining and dig into doing your sales, marketing, admin, etc. However, this poor guy seems like an ogre. Bosses like him are probably the reason that so many of us want to work for ourselves. He seems driven solely by profits. That's certainly not how I want to live my life. Do I want to have a profitable and fulfilling business? Of course! But what is that worth if I love it more than my family. That seems out of whack as to why I'm in business for myself.

[Deb Pang Davis : Cococello]

Ilise ~

Do I know my numbers? Almost! I have one last section to calculate and then I'm golden. In fact, I pay more attention to numbers now more than ever and am planning on taking the time to figure out new target numbers. This way I can see if the blood, sweat and maybe tears I spend developing my business or a new product is worth it and/or how much I would need to sell to get back the investment plus profit. Plus, its nice having a number as a goal. It's measurable.

The dude in the NYTimes article... LOL. He's a character alright. He sounds very old school and maybe that works for him.

I don't think a business should be motivated solely by numbers and the numbers help reveal your potential. Not looking at them and/or choosing not to understand them is, I think, not healthy for you or your business.

And sure, some people have a hard time deciphering numbers so I would recommend hiring a really great bookkeeper/accountant to help with that.

Like Matt, I use Freshbooks but I also use Quickbooks to track everything. Mint is also a great program to use. With all these online apps to use, tracking and knowing your numbers is so much easier!

[Danielle Baird]

Hi Ilise,

I took a break from entering my numbers to check my Google Reader feed, and saw this post! I had to laugh.

I don't know my numbers...mostly because I realized in September that I had been entering all of my information incorrectly into Quickbooks. The thought of starting over was so overwhelming...so I kept putting it off, and putting it off. Now that my appointment with my accountant is around the corner, I'm crunching all my numbers for all of 2009.

Once I get caught up, I'm determined to stay on top of my numbers...checking in at least once a month. As the others mentioned, I think I have to schedule time in my calendar so this never, ever happens again.