There’s one area in business where most owners get confused, overwhelmed, in a panic, or simply bury their heads hoping something may magically change.

Yes, it’s the Financials.

Now, if you feel like this, imagine how your team feels?

It’s likely they have little or any knowledge or understanding of:

• What the business needs to make…
• What it actually makes…
• The difference between revenue and profitably…
• What effect spending and additional costs makes to these…
• Connecting the dots on the impact they can have to how the business performs…

I was on a group call with a Business Community last week and we discussed a concept that we use, that gives clear visibility of your financials across your entire company…

It shows your team where – as a business – you’re over-spending or losing profit…

And it doesn’t involve complicated spreadsheets or a degree in accountancy.

It’s called Your Business Pound…

If you break your Financials into one pound, you’ll be able to show your whole business as one pound as a cost or revenue basis.

For example:

100p = £1

£1 = 100%

Say your rent is costing you £3,000 out of a revenue of £15,000, then this is 20% or 20p of your business pound.

Or another example…

If salaries are £1,000 out of £10,000, this is 10%, which will represent 10p:

What if someone wants a pay rise? Where will this extra % or pence come from out of your business pound?

And there may be times that you don’t make a profit so you’re now running at £1.10p…

This means that you’re putting in 10p of funding for every £1, thus making a loss.

Make sense?

This week have a go at:

• Breaking down your business into one pound as a cost or revenue basis.
• Putting aside some time to communicate this to your team so they understand it.
• Making it visible so everyone can see it, 24/7.
• Making it part of your everyday language so it becomes a daily habit for everyone to think about this, and to connect the dots.

Martin Norbury

Investor | Business Mentor at Advocate | Author of I don’t work Fridays