Are You Looking at the Right Numbers? 5 Numbers to Watch (and Why)

A few weeks ago, I attended a webinar with JM Fortier about money. YAY! So glad he’s bringing this important topic to the forefront.

One thing he mentioned, if you want to be successful for the long-term, you need to look at your numbers regularly. Yes sir, preach it!

He didn’t mention, what exactly you should be looking at? 🤔

It’s funny because I had a client say the same thing to me on a coaching call, “I know I’m supposed to be looking at my numbers, but I don’t know what I’m looking at.”

Short answer:

The goals:
💰 Stay on track to hit your profit goals
🚩 Catch red flags early—before they become big problems

Okay, let’s get into more details:

First, pull out your budget (you have a cash flow budget, right?)

Then, run these reports from your bookkeeping system:

• Your profit and loss, with a column for “% of income”
• A/R Aging Summary Report
• Balance sheet

And here are 5 things you should be looking at:

1. Expenses as a % of revenue/income

👉 Are any expenses over 5%?
Every business is different, but this is your first sign that you may be going over budget, and need to keep an eye on that expense.
✅ It helps you know where your cash 💸 is going and ensure you’re not overspending.

2. Look at your Budget: compare Projected Sales to Actual sales

📊 Is everything on track? Are you meeting your goals?
🚀 If not, what’s your next move to hustle more sales?
🎉 If yes, congrats! What’s your plan to stay on track?

3. Budget: Projected vs. Actual Expenses

How does the budget you created for yourself stack up to your actual expenses?
🔍 Overspending? Time to tighten the reins.
👏 On budget? Awesome! Now keep it up.

If you’re struggling to compare your “projections to actuals” then you probably need to better line up your chart of accounts (in QuickBooks) with your budget. I’ve seen farmers create their budget independent of the reports from QuickBooks and it really makes it difficult. The line items in your budget should correspond to the line items in your bookkeeping system.

4. A/R Aging Summary Report

📋 Check overdue invoices.
☎️ Do you need to call customers for timely payments?
💡 What’s your strategy to improve collections?

5. Balance Sheet Report 💵

• Check your bank balance—do you have enough cash to cover bills?💳
• In terms of knowing your bills, you can look at the credit card balances and the payables accounts. You can also look through your mail (and at your calendar) to see what bills you have coming up. Look at payables (credit cards, A/P):
  * Can you cover your bills?
  * If not, how can you prioritize payments?

✨ Need a budget or tools to stay on track? Join me in The Farmer’s Office Essential Cash Flow Planner!