Skip to main content
The numbers that count

A Deep Drive Into The Numbers That Count For This Financial Year

Written by Eastwood & Co on .

As part of our 2024 Fiscal Kickstart series, we’re talking today about the numbers. While this might not be everyone’s cup of tea but it’s absolutely crucial if you’re running a business here in Aotearoa. Understanding the numbers behind your operation isn’t only good practice, it’s essential for your business surviving and growing. We’re talking profits, cash flow, margins – the whole shebang. It’s not just about keeping the lights on, it’s about making sure your business is set up for success this financial year and beyond. So here are 7 things to think about when planning your businesses financial goals in 2024.

1. The Foundation of Your Business

Think of your business like building a house. Your numbers? They’re the foundation. Without a solid base, it doesn’t matter how flash the place looks, it’s not going to stand up to the first storm that rolls through. In business, those storms could be anything from a sudden market downturn to unexpected costs that crop up. Solid numbers mean you’re ready for whatever gets thrown at you.

2. Looking at Your Business as an Investment

Now, what if you looked at your business not just as a job or even a passion but as an investment? This mindset shift can change the game. It’s not just about the day-to-day grind but building something that grows in value over time. This perspective encourages you to work on your business, not just in it, focusing on long-term strategy and value creation rather than getting bogged down in the daily operations. Down the line, this can pay off big time.

3. Getting Paid Properly

A key principle here is that as a business owner, you should be getting paid for the work you do, sure, but you should also be seeing a return on your investment. It’s like wearing two hats – one for the day job and one as the investor in your own business. Both roles deserve compensation. This dual compensation model ensures that you’re rewarded for your immediate contributions while also building a business that pays dividends in the long run.

4. Rethinking Break-even

Once upon a time, breaking even might have been enough. Not anymore. These days, aiming for a 10% net profit is where it’s at. That’s your new break-even point. This isn’t just about making money for the sake of it, it’s about having enough to reinvest in your business, to fuel growth, and to ensure you’ve got a healthy cash flow to support operations and investments.

5. The Big Three: Revenue, Profit, Cash

If we break it down simply, revenue is for show, but profit keeps you sane, and cash is king. This mantra highlights the importance of not just generating sales but doing so profitably while keeping a keen eye on cash flow. Revenue might look impressive, but it’s the profit that matters, and ultimately, cash flow is what keeps the doors open.

6. Beyond Monthly Figures

Focusing solely on the monthly figures can be misleading. It’s easy to get caught up in the highs and lows of each month without seeing the bigger picture. That’s where the concept of ‘rolling twelves’ come into play. By looking at your performance over the past 12 months on a continuous ‘rolling’ basis, you get a clearer, more stable picture of where your business stands, free from the ups and downs of seasonal changes or one-off events leaving you with a clearer view of your business’s health and trends.

7. The Importance of Financial Literacy

Something we need to talk more about is financial literacy among business owners. It’s one thing to know what’s coming in and going out, but understanding your numbers on a deeper level? That’s where the real power lies. It’s about making informed decisions that can steer your business in the right direction.

So, what’s the story your numbers are telling you? They’re more than just figures on a page, they’re the narrative of your business’s past, present, and future. As we kick off a new financial year, let’s not underestimate the importance of this narrative. By getting to grips with our financial data, we’re not just surviving, we’re setting ourselves up for success, growth, and all the good stuff that comes with it.