How many times have you heard that if you really want to succeed in business, you have to know your numbers?
When I first started out as a solopreneur, I didn’t think that this advice applied to me. Because I don’t own a huge company, manufacture products, or have a ton of employees, I felt that I was somehow excluded from keeping track of these types of metrics. Boy was I wrong.
I’ve since realized that not taking the time to calculate certain numbers left me feeling more than a little clueless about where I stood as a business.
Yes, there are some numbers that don’t apply to me as someone who works solo and provides services versus goods. However, there are also a few metrics that, when I know what they are, can serve as a sort of road map, helping me grow my business quicker and with less effort.
Which numbers are those?
Keeping track of annual revenues is pretty much Business 101 because this number can help you easily see whether your business is growing or if you need to do something different to bring more business in.
But taking the time to calculate how much you make each month of the year is also important as a solopreneur, especially if your particular industry fluctuates or if you’re just starting out and don’t have a strong set of core clients that supply a regular stream of work.
In my first few years as a writer, there were some months where I made thousands of dollars and others where I was lucky to bring in a few hundred. I never knew from one month to the next what to expect, which greatly increased my stress.
This changed once I started paying attention to how much I earned per month. Breaking the numbers down in this way enabled me to better identify a few trends that occurred year after year. Now that I knew more what to expect, I could better prepare for months that consistently tended to be slower than the rest.
Calculating my monthly revenues also helped me realize the power in being proactive, of reaching out to new potential clients when I was still busy to keep those downtimes to a minimum.
Now I have less of an issue with the “feast or famine” phenomenon that is typical in solopreneurship, which makes working on my own more enjoyable and less stressful than when I first started out.
Payment Processing Fees
I never thought about payment processing fees when I first started my business. I just knew that getting paid electronically meant that I was typically paid faster and, since I tend to move around a lot, it also meant that I had fewer issues with keeping clients apprised of where to send a check. Plus, some of my clients were overseas, which made using an online platform necessary to receive the funds in American dollars. The fact that there were fees associated with this type of transaction was just part of doing business.
Yet, when I took the time to actually sit down and calculate how much I was losing to these payment processing sites, I was astonished. I was throwing away a decent part of my income, solely so I could make an income!
Does knowing this number change the payment methods I offer my clients? No, it really doesn’t. But it does make it easier to appreciate the payments I receive that don’t have a fee removed, even if it means that it takes me longer to get paid.
Knowing how much I lose in payment processing fees also makes this number a factor I consider when quoting new work. If I know that the payment method will include a processing fee, I can adjust my rates accordingly to minimize that loss.
Monies Received from Different Income Sources
I’ve also found great value in taking time at the end of the year to identify my top sources of income.
For instance, based on my calculations, I’ve learned that 75 percent of my income comes from core clients. These are the clients that I’ve had long term that repeatedly ask for new content. Only one-fourth of my annual revenues come from clients who want help on just one project.
Based on this, I know that if I want to grow my business, I will likely get better results if I focus on bringing in more clients who want a regular stream of content versus trying to find one-off projects. This changes who I reach out to, but also the jobs I sometimes accept because I know that retaining a repeat client is often more valuable that taking a job that is one-and-done.
Keeping track of these three sets of numbers can help you make better decisions in the year ahead. Decisions that result in a stronger, more profitable business, all because you took the time to see where you stood.