- Posted by Sarah Petrie 20 Jul
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The following transcript is from an email communication our founder, Judy Reynolds had with one of our amazing business clients. This explanation is super relevant to all business owners and leaders – so here it is as it was written. (Except the names have been changed to protect the innocent!)
Congruency NOT Contradiction
“The session before last, we spoke of wins being more than an immediate sale and that some activities are rainmaking activities which produce future income. I wanted you to be clear that a successful day can be measured by the extent to which you have progressed your WHY as well as the KPIs we have around daily sales, gross margins and profit etc. John (not his actual name), you mentioned that this re-focus had re-invigorated your passion for the business and the day to day activities that are a part of doing what you do.
The last session I focused with a degree of urgency on the importance of knowing your numbers. I left feeling that perhaps it sounded like I was contradicting myself. One session it was all about your WHY and the next, your NUMBERS. So please let me explain.
The measure of a successful business is what I call high impact intentional profit. What that means is the WHY is known, owned and breathed AND the numbers are known, owned and breathed. One is no more important than the other. Passion alone won’t cut it. Together though, they make magic. The purpose and WHY brings passion and high energy to the table and the numbers bring clarity, focus and accountability.
When you really believe in WHY you do what you do, you must do what it takes to ensure that you continue to progress that WHY. And that means that you must do what needs to be done to be financially sustainable, to grow and be profitable in the long term so that you can do more good for longer. And that means that you must know your numbers. Numbers like your breakeven, budget and stretch in terms of the activities, the sales, and the profit – the number of leads, conversions, retention, average sale, number of return sales, gross margins, stockturn and so on.
And then there is the need to be really clear and very diligent around the amount you are prepared to invest in this business. Funds invested, whether debt (bank loans) or equity (private loans) must provide a commercial return to the investor. As an investor, you are entitled to a return on the funds invested and repayment of capital. You may choose to extend favourable terms, however, the intention should be that the business does not erode your personal wealth.
The numbers will become second nature. They must.
Don’t be afraid to commit the numbers to paper. Yes, documentation amplifies commitment and KPIs bring numbers to life, and it creates another level of accountability. Remember budgets are plans not promises and they can change. Numbers must be monitored, and adjusted if circumstances change. Remember you own the numbers, the numbers don’t own you.
I recommend that we spend the next session working through the numbers, taking the mystery out of them and making sure that the budgets and KPIs are in place for this coming year. (And no, you can’t be sick that day!)
There is congruency between the numbers and the WHY – not contradiction.
Does this explains the need for the dual focus?”
John is enrolled in our BUSINESS by DESIGN program with monthly mentoring sessions – a powerful way to keep up the momentum, to learn and build high impact profitable businesses. Find out more at https://openinggates.com/transform-your-business/