understanding the numbers

most entrepreneurs were not business majors in school.  most of us have something we love, something that is important to us, something that we are passionate about-- something that is driving us-- and it is not about the numbers.  we are artists and artisans, socio-political movers and shakers-- BIG idea people-- but not number crunchers.

what i have learned over the years, and what i try to pass on to other people who are thinking about starting a business, is that-- actually-- IT IS ALL ABOUT THE NUMBERS.  if you want to have a business that can sustain itself over time, you have to understand the business/ financial equations and what they mean for the health of your business.

this does not mean that you have to go out and get an MBA before you open your flower shop.  your passion and drive for what you do will carry you through the rough parts, and will carry you through learning how to understand the business side of what you are doing.

when i first started i didn't understand the numbers at all.  i had a little money to invest, and i just spent it (carefully) on display furniture, a cash register, beautiful glasses and dishes and textiles-- i very simply  set up a space and a shop and opened the door!  my accountant had told me which numbers to keep track of for taxes, and for the first few years i dutifully kept track of those numbers (by hand, on paper) and learned very little about how those numbers affected my daily life.

since then i have come to understand that those numbers that i report to the government for taxes are actually part of an equation that helps me to run my business-- and they are a very important part of my living with intention.  there is the income (the money coming in from sales and design consultations), the expenses (all the costs associated with my business-- from office supplies to inventory to payroll to the services of my attorney and accountant), and then there is cash flow-- the way to keep track of whether i have the cash i need to do what i need when i need to do it!  those numbers allow me to plan for my financial future!

understanding how the numbers fit together-- how changing one changes the others-- has come to seem like a very fun puzzle.  AND-- by playing with the numbers, i am able to predict what is going to happen in my business over the next month, year-- or however long out i want to predict.  it is not an exact science-- my business is affected by an awful lot of exterior factors-- but planning how to grow and change the business in a way that best supports my life is incredibly affirming.

understanding the numbers is an investment in myself.

i like that.


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