One important question will help position businesses for success | Business
It’s finally here; the end of 2020. We’ve all been looking forward to it but need to recognize this challenging business environment we’ve been in will not be drastically different on Jan. 1, 2021. Yes, there are vaccines now. Yes, we’re closer to a new round of coronavirus relief. Those of you still in business have shown resiliency and a capability to adapt, and the vaccine and relief package should provide a boost. Will it be enough? Time will tell. But to business owners, I want to ask one important question as we go into the new year: Words or numbers?
I was asked that question years ago in an interview. “What are you more comfortable with, words or numbers?” It’s an easy question. But both were important to the job. Likewise, in business both are important for success.
In business, you use words to communicate with customers, employees and vendors, among others. Words make up your website, signage and how you answer the phone. But the words I want you to focus on are the ones that make up your business plan. You wouldn’t be in business if you didn’t have some sort of a plan, but is it written out or still in your head? Is it a tool you use to adapt to the changes that take place in your industry or the world? Having a written plan is useful for more than just getting a loan. It’s your written guide for how you’ll operate. It’s your map for staying on track. It should be written by you to be effective. It reminds you and informs others of the “who, what, when, where, why, how and how much” aspects of your business.
The “how much” brings us to the numbers. Numbers are critical to your plan and work in conjunction with your words. Both tell your story. The numbers show how much money you plan to make, how much you need to make, and how much it will cost you to make it. The numbers will show your breakeven point, how much you can pay yourself, and how much you may need to borrow to get you through slower times. Your numbers can be compared to others in your industry to see how well you’re doing versus your peers. Numbers can alert you to potential problems ahead. Failing to understand your numbers can be detrimental to your business.
So, I ask again, words or numbers? If your answer is “words” be sure to get your CPA or SBDC adviser to help you understand your numbers. If your answer is “numbers,” the SBDC is the best no-cost resource to help you with your words. Both are essential to business success, regardless of what year it is.
Mike Samford is an adviser with the UHV Small Business Development Center. The UHV SBDC is part of a nationwide small business assistance program serving the small business community.