The new financial year is here! Now is a great time to review your numbers and we covered exactly which numbers you should be tracking and measuring in our latest podcast.
One point I really wanted to reiterate is this:
Revenue is vanity, profit is sanity.
We often see business owners bragging about their $2million dollar brand. But what does this actually mean…?
What they usually mean is they generated $2million dollars in revenue. And while this is great, revenue doesn’t mean a damn thing unless you’ve got profit left at the end of the day.
I would much rather own a company that turns over $500k and is left with a net profit of $100k, than a company that turns over $1million dollars but is only left with $20k net profit at the end of the day.
So many business owners are left with little or no profit at the end of the year – or worse – they are left with an unexpected tax bill that they can’t pay.
This is why when our students join eComm Ignitor the first thing we get them to do is track and measure their important numbers. And more often than not our online store owners realise that they aren’t making much profit (if any). They essentially have a hobby. And while this realisation sucks, it’s so important to understand because you can’t fix a problem you don’t know exists.
Having your finger on the pulse with regards to your numbers is essential to having a successful business. So instead of focusing on the metrics that don’t matter, focus on those that do.
- Instead of focusing only on how many people are coming to your site, track and measure how many of those actually convert into a sale.
- Instead of focusing only on how many Facebook fans or Instagram followers you have, track and measure how many of those people actually engage with your brand.
- Instead of focusing only on how many sales you make, track and measure how many of those are repeat purchasers.
- Instead of focusing only on your revenue, track and measure how much profit is actually left at the end of the day.
You can read our blog which details exactly which numbers we recommend you track and measure in order to have a successful online store.
So, instead of focusing solely on revenue, turn your attention to those numbers that actually matter. And remember, revenue is vanity, profit is sanity.