Podcast: Play in new window | Download

Brian talks about the importance of numbers, as he helps a friend sell their business.

Transcription

Why do the numbers matter in business?

Hi I’m Brian Pombo, welcome back to Brian J. Pombo Live.

If you own a business, if you run a business, if you are the main person in charge, one of the toughest things to deal with for most people that get into business is keeping track of the numbers.

I’m working with a friend selling her business. And I’ve worked at purchasing businesses before.

The most common issue that I’ve seen over and over and over again with business owners, especially ones that are looking to sell, is that they did not keep close enough track of the numbers.

Most of the time, I would say it’s not like just a little bit not keeping track, they really did not keep a track of the numbers. They’re gonna have a very specific situation of business, I was looking at purchasing here locally.

We were looking at the back end of her business, she can pretty precisely detail income coming into the business about how much money she’s making on each different sector of the business. She even knew how much money she’d be able to make off of other things that she had done in the past or that she knows other people that have done.

If we added these on, you’d make this much more money from the business. She could kind of guesstimate slightly what the expenses were, but could not give me a number by number, how much it would cost. Even a general estimate from month to month or year to year of how much it costs, expenses-wise.

So she had the end really figured out. She couldn’t calculate the out. And I think it was a lot of personal issues that she was going through at the time that she didn’t feel like she had the bandwidth to be able to sit there and really crunch the numbers she was really looking for, for a quick sale.

I think because of that she wasn’t able to do it. But because of that, also, I wasn’t able to move forward because I was bringing in other investors, I wasn’t looking to put it all down myself, I was looking to bring in other investors to help make it happen.

So that was a very interesting dilemma. I had seen it a little bit with business owners before but now I see it over and over and over again, especially if you’re a solopreneur.

It’s your baby and you’re the main one in charge, it’s really easy to smudge numbers here and there when you’ve got access to the till when you’re doing any form of cash business whatsoever. You can just take that money and go home without much of a trail that temptations too high for most people, most people are going to do it, they’re going to not be all that clear cut on their taxes.

You know, they’ll make up the numbers that look reasonable. They’re able to skate by on that.

Over time, though, here’s the real problem, is when you’re ever looking to sell your business, it’s really tough, you really should know those numbers while you’re running your business. But if you’re making enough money, and you don’t feel like you’re spending too much money, then you’re going to keep going.

Even though a little adjustment here and there can make a big difference. I mean, you could be making twice as much money just by cutting an expense here, making sure this money goes here instead of here, making sure your money is coming back in the right way that can make all the difference in the world to you initially.

But then when you’re looking to sell it, you’re not going to be able to sell it without those numbers, not to anyone that would be able to keep it running. If you’re selling with someone that hasn’t ever done business or anything else, and they are looking at those numbers.

That’s not the type of person you want running your business to begin with. Unless you’re just looking to make the money and run and not worry about what happens to your business. If it fails tomorrow. You don’t care. That’s a different story.

If you do care about your business, if you do care about what happens to it and what happens to your customer base and everything else for your sake, and the sake of your customers and the sake of your business running beyond you.

You got to watch the numbers. And if you need help not all of us are numbers people. And some of us kind of have an interest in numbers but aren’t very good at them. Like I’m that way.

I really liked numbers, but I’m not very good at them. I’m not very good at keeping them and tracking them and doing all that stuff. I automate as much of that stuff as possible. I outsource as much of that stuff as possible wherever I can.

It’s just something to keep in mind as you’re going through with the life of your business, or if you’re looking to sell, you’ll want to bring someone in who understands the numbers and can help you fix the numbers figure out exactly how much it took.

For this particular business I’m thinking of that I’m working on right now with helping sell, we’re having to kind of back things up and say, okay, with today’s prices, everything else, how much does everything cost?

How much can we expect to get back in, and you have to base the numbers off that that you can’t go on past performance because there’s very little record of past performance. So that’s just a quick tip for me to you.

Hopefully, that’s helpful. If you want some more ideas, I have a book, 9 Ways to Amazon-Proof Your Business I wrote this book. It’s all about how to make your business competition-proof. So this will make your business fun and exciting to run. While at the same time, if you’re ever looking to sell it, you’re gonna make a pretty penny off of it. If you could make a competition proof.

You can go pick up a copy wherever books are sold, or you can buy a copy or you can download a free copy of the digital copy at AmazonProofBook.com. It’s all I have for today. You have a good one, we’ll be back tomorrow.

In the meantime, get out there and let the magic happen.