Once I was working with a very large company and while walking up the stairs to a meeting I heard a heart dropping sound. My pants ripped!!! So there I was standing in a stairwell with my underwear exposed and absolutely no time to change. Could you imagine being in that situation, ripped pants, and maybe five minutes until you need to walk into a very important meeting?
I was embarrassed and angry at the same time. The anger was with myself, because I had gradually gained weight over the last couple of months but I did absolutely nothing about it. My common sense should have told me that it was only a matter of time before my pants would split, but for some reason I ignored it.
When it comes to your finances and your business you could be headed down the same path of embarrassment and anger, if you are not paying attention to the right indicators. Think about it; no one goes broke overnight and no business goes bankrupt all of a sudden. The truth is, there were signs along the way that could have told you what road you were headed down.
Here are a few signs that you should watch to get an idea of what direction you are going.
Personally:
Income vs Expenses – if you are spending a large percentage of what you make this is not a good sign, set a goal for yourself like “keep your expenses at less than 65% of your take home pay” and watch this number on a regular basis.
Retirement account – if you have been working for any amount of time and you aren’t regularly putting money aside for your future, the road you’re on doesn’t have a good ending.
Goals – What are your financial goals for this month or even this year? It’s very rare to hit a target that you aren’t aiming for.
For your Business:
Repeat customers – if customers are not coming back to do business with you, this is likely a sign about your product or service that you need to pay attention to closely.
Conversion rates – how many people have to see your ad or hear your sales pitch before they become a paying customer? A large number could mean you are advertising and trying to sell your product or service to the wrong prospective customer group (Hint: with smart social media advertising or google trend data this one is much easier to fix nowadays).
The bottom line – If you aren’t monitoring your financial results (at least monthly) an out of business sign or bankruptcy is likely in your future.
No matter how big or small your business or personal financial situation, you should develop the habit of monitoring the important indicators on a regular basis or hire professional help like the TLTurner Group to assist. Your future becomes very predictable when you know what signs to look for.