You are an entrepreneur, you love your note business, and you want what’s best for it. A lot of money and time goes into your business to make sure that you are up to date on the latest information. You think you are doing everything right, but you have no real way of measuring how your business is doing.
Is your business thriving? Or is it just getting by? How would you even know? Get to know your numbers. Business is all about numbers, and your numbers are telling you a story. And if you want to be in business for the long haul, you need to understand that story.
According to the SBA’s Office of Advocacy, the survival rate of small businesses is about 50% at the five-year mark (I personally believe it is much lower, closer to 10%). With all the investing in the skills that you need to run your note business effectively, take the time to invest in the financial skills that every note business owner needs to have to thrive.
Maybe you find financial information intimidating or scary, you might feel that maybe you don’t even need to know how the finances work, or maybe you are trusting all the financial information to your accountant and bookkeeper. But have you considered how much better you could make your business if you know your numbers better? You are the expert of your business, and nobody knows your business better than you.
Do you know what value your numbers would bring to the table? Numbers can help identify where your business is leaking money. When you run regular financial reports, you will see how much you are spending on certain expenses and know to question the expenses when they appear higher than what you planned. For example, you may notice how high your marketing expenses are, and once you’ve identified that, you can monitor those expenses.
You would know which products/services your business offers are making you the most money. When you sell more than one product or service, you can measure the profit margins on each product or service and know which is more profitable and where the weaknesses are in the ones with the lower margins. You can set expected margins and make adjustments with the required expenses or price to meet your goals. You will know what price you need to charge to meet your expected profits.
You would have a clear understanding of how much your business needs to earn to meet its’ objectives. When you understand how many sales (closed note transactions) you will need to bring in to make a profit, it helps with establishing goals. You will understand what sales level your business needs to achieve to breakeven, and you will know at the point you have achieved your breakeven for the year.
You could increase your profits without even closing a transaction. With methods that keep your numbers in check, it will reduce your expenses thereby adding more profit to the net income. And more profit means more money in your pocket.
The bottom line here is that you deserve better, and so does your note business. When you know your business numbers it makes you a better note professional. And it doesn’t need to be scary. Investing in this knowledge will build unshakable confidence as a business owner. Be kind, keep safe and stay healthy. Remember success demands action, keep on marketing, it’s going to work! TWITA! (That’s What I’m Talkin’ About!)
Jeff Armstrong of Armstrong Capital has been a note investor specializing in the performing seller financed note industry since 1991 as well as a professional appraiser of promissory notes since 1999. For more updated and current information on how he can help you with your note business, note investments, note appraisals or to request pricing options on a note visit www.armstrongcapital.com to email him and subscribe to Jeff’s Weekly Training & Tips Newsletter. You can follow him on Instagram and Facebook @ TwitaJeff