Business | Numbers Knowhow

Customer Lifetime Value: How To Calculate It?

Mahmood Reza — Fri, 09 Feb 2024 08:32:30 +0000

Why Is Customer Lifetime Value Important? As a business owner, you need to cater to your customers. Having satisfied and loyal customers is extremely vital to the growth of all businesses since, at the end of the day, the gains, and the profit one makes are due to the customers. However, not all of your customers can be put in the same basket. Each has a different impact on your business i.e. has a different worth. In the business world, we refer to that as customer lifetime value. But, what exactly is customer lifetime value and how do you calculate it? Further on in this blog, you can find the fundamental details relating to this topic: what is customer lifetime value (or CLV) and how to calculate it. What is the customer lifetime value? Customer lifetime value is a metric that presents to you how the profitability of your business depends on your customers. It shows you how much income you can expect from your customers. Certainly, making a profit is the goal of any business, so knowing your customers, knowing their value can be rather beneficial for you. It can help you make better decisions about when and how […]

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Know Your Numbers & Financial Ratios

Mahmood Reza — Fri, 02 Feb 2024 09:28:52 +0000

Numbers are everywhere, and for the most part, we just ignore them. That is unless we’re forced to pay attention to them when it comes time to do our monthly taxes or budget. But, for most people numbers don’t seem interesting. And this is something I’ve seen over and over again. Know your numbers I can’t emphasise enough how important it is to know your numbers. In your business, your numbers are your best friend. Once you realise that you will become less anxious about them. The enormous benefit your business numbers give you is clarity about how healthy your business is. They will help you in the good and not-so-good times. Because numbers don’t lie to you. They will always give you that reality check. They’ll wake you up from slumber and prompt you to take action. Financial ratios Your numbers can be turned into financial ratios. Consequently, they can tell you a lot about your business’s health and where it could be headed in the future. Here’s a quick guide to how to know your numbers and how to use the most essential financial ratios. Subsequently, you can start using your numbers to make smart decisions for […]

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Have A Successful Business

Mahmood Reza — Fri, 26 Jan 2024 11:03:32 +0000

What does having a successful business mean to you? That is a really important question to ask yourself when starting out. This quote below sums it up rather nicely. “If you don’t know where you are going, you’ll end up somewhere else.” – Yogi Berra And really, if you don’t know where you want to go, it is much more likely that your course will have many twists and turns. Not to mention, that it will be a bumpy ride. On top of that, it will be difficult to figure out how to reach success. As we know, you’ve got to start with your ‘why’ and you’ve got to set smart goals. But more on that later. It’s important to stress that business growth doesn’t just happen organically – it takes time, effort, and commitment. In other words, it always starts with a plan. Certainly, most people want to make a mark and have an impact with their business. And whatever your company’s remit, be it private gain or public benefit, to have a meaningful effect on your clients and yourself, it needs to make money. Only with money can it grow and scale and have the impact you […]

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Teamwork In Business

Mahmood Reza — Tue, 23 Jan 2024 08:59:18 +0000

Teamwork in business is crucial for success. When individuals come together to work towards a common goal, magic happens. It’s because they bring with them a diverse range of skills, knowledge, and perspectives. Team members achieve better results together than they would on their own. So why is that? Firstly, being part of a team matters – even for those of us used to flying solo. Secondly, teamwork in business feels like being part of a community where you build connections that can facilitate business growth and success. Teamwork in business is beneficial for you, as an individual, and also for your business. Teamwork in business or flying solo – which is better? Most businesses and the self-employed are typically independent individuals. As such, they l take on many tasks such as HR, finance, and marketing. They’re practically a one-man(woman) show. On the other hand, in a larger business, these tasks are typically done by different departments – essentially doing teamwork in business. Whether it is better to work solo or in a team is a matter of preference, but also a matter of business growth and scalability. Self-sufficient entrepreneurialism can offer a sense of independence and control over […]

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Key Performance Indicators In Business

Mahmood Reza — Fri, 08 Dec 2023 11:24:14 +0000

You need to really get to grips with KPIs (key performance indicators) if you want your business to move forward. Introduction to key performance indicators To begin with, let’s define key performance indicators. They refer to the goals and measures that you put in place to make sure that you are on track for business success and growth. In essence, they are specific metrics that you will consult to see whether your business is achieving its goals and objectives. The clue is in the name. KEY– what is important for you PERFORMANCE– signs of health and business growth INDICATORS – things that show how you are doing and what you can act on as a result Key performance indicators can vary depending on the industry, company size, and goals, but they will typically revolve around revenue, profit margins, customer satisfaction, employee performance, and operational efficiency. If you’re in business, it’s understandable that you want to make money, have an impact, and thrive. So, you need to know what is going on with your business. As the old adage goes, you can’t manage what you don’t measure. Using KPIs, you can identify which areas they need to improve in. Do […]

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Sales vs Profit: Know The Difference

Mahmood Reza — Mon, 04 Dec 2023 11:11:53 +0000

Any business that strives towards success should be making money, or in business terminology, generating profit. One of the main reasons that businesses go under is because of the confusion between two seemingly similar, but in reality quite different aspects. It’s about the famous duo: sales vs profit. What do we mean by cash? How about profit? How are they related to each other? Which one of the two is more important for business growth? I will cover these points in this blog and bring you closer to understanding what really keeps your business going forward. So, let’s start bit by bit. Sales vs Profit: What is the difference? Whatever your business type is, there are products and/or services that you are offering to the end customers. Hopefully, they will recognise your worth and buy from you, not just now, but in the future as well. Now, whenever someone buys your product, you are generating sales. You are piling up the cash you receive from your customers. However, and here is the tricky part, the amount of sales is not actually your end profit. We now come to the sales vs profit part. So, yes, you have received the […]

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Final Steps Of A Business Plan

Mahmood Reza — Fri, 01 Dec 2023 11:51:10 +0000

Each business plan needs to be meticulously constructed in order to be effectively used in the future. This blog will discuss the final steps of a business plan and give you an overall idea of what needs to be done. The three groups that encompass these final steps are the following: Management Financial forecast Presentation Final steps of a business plan: management One of the final steps of a business plan is defining the management roles within your team. You can achieve this by outlining the strengths and weaknesses of each team member as well as describing their background and experience. Consequently, you will have a clear overview of who in your team is suitable for a certain role, and make the allocation accordingly. Furthermore, you need to clarify how you intend to cover the key areas in your business, such as production, sales, marketing, finance, and administration. Lastly, you need to maintain your management information systems in good condition. This includes the management accounts, sales, stock control, and quality control. How committed are you? Businesses often further develop and prosper thanks to partnerships and investors. So, if your goal is to attract banks or potential investors, as a […]

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Overtrading: Spot It And Fix It

Mahmood Reza — Fri, 27 Oct 2023 08:25:48 +0000

Are you looking to grow your business? If so, then it’s important that you don’t overtrade. Overtrading is a very common problem for businesses. Furthermore, it can lead to financial failure even if you’re making profits in your business. That situation, folks, is known as overtrading and that’s the theme of my video today. So let’s get started on our journey together on avoiding overtrading in your own business. Let me introduce myself first of all – my name is Mahmood and I am an accountant who works with lots of small businesses just like yours every day helping them improve their profitability through better cash management practices such as understanding their true cost base so they can make more accurate pricing decisions for their products or services which leads directly onto improved gross profit margins which means higher net profits at year end for them too! One thing I see often is clients struggling financially because they’ve been trading beyond their means because they want growth now rather than waiting. Have you ever wondered how to spot and fix overtrading? If so, then this video is for you. Over the next few minutes, I’m going to show you how […]

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Pricing For Profit: 5 Key Numbers

Mahmood Reza — Mon, 23 Oct 2023 10:47:16 +0000

Wondering how to price your products or services so you can make a profit? It’s not as simple as it seems because it involves several things to consider. That’s why figuring out the right price is one of the biggest challenges business owners face. There are two main financial outcomes of pricing and it’s so important to understand them. And to know how to calculate them. Once you know what those two outcomes are, the next step is to consider five key factors that will help you set a price for your product or service that meets your business objectives. And finally, I’ll show you a FREE online pricing calculator that makes it easy to do all this math for yourself. Watch this video now and learn how to price your products or services for success! How to price your products or services so you can make a profit You need to make sure you’re covering your costs and making a profit. In this video, I’ll explain the two main financial outcomes you need to meet: Time availability, and Quantity of time. These two are essential to take into consideration because nobody can devote all of their time to […]

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Achieving Success In Your Business

Mahmood Reza — Mon, 16 Oct 2023 10:30:17 +0000

Feeling like you’re not achieving success in your business? You’re not alone. You’d be surprised to hear that many people feel this way at some point in their lives. But don’t worry, I can help. Once you’ve learned what success actually is, you can start to work on achieving it in your own business. However it won’t be easy, but it will be worth it. I promise. Here are some tips and examples of how you can achieve success. Watch my video on business success and find out how to achieve it for yourself! A few words on success Certainly we all have our own definition of success, but there are some commonalities that we can all agree on. To clarify success is not a destination, it’s a journey. It takes hard work, dedication and lots of perseverance. But most importantly, it takes learning from your mistakes and continuously progressing forward. There are so many resources out there to help you achieve success in your business. All you need is the desire and willingness to learn and put in the effort required. Stay focused on your goals, don’t compare yourself to others, and always keep moving forward. You can […]

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7 SMART KPIs All Business Owners Should Track Each Month

Mahmood Reza — Tue, 10 Oct 2023 08:08:10 +0000

SMART KPIs may be a new concept for you. However, you’ve probably heard of SMART targets or objectives which are often used for employee performance measurement. SMART stands for Specific, Measurable, Accepted, Realistic and Time-bound, but what does this mean when applied to KPIs? KPIs, or Key Performance Indicators, are metrics that businesses can track over time to identify progress (or lack of progress) toward their targets. Targets are long-term goals such as a 10% year-on-year increase in net profit. So use a SMART KPI focused on net profit to monitor your success monthly or quarterly towards reaching your target. Therefore when you closely monitor your SMART KPIs, you’ll know whether your target is challenging enough or perhaps too challenging. In addition, you’ll get vital information during the target period rather than waiting until the end. In much the same way that mid-term tests and mock exams help students review their progress toward their final exam, KPIs help business owners monitor how well they are doing. How do I choose which SMART KPIs to track? To clarify it’s important to realise there are dozens, if not hundreds of possible SMART KPIs you could track. Therefore you must use your overarching […]

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Knowing Your Costs – The Key To Any Business

Mahmood Reza — Mon, 25 Sep 2023 10:46:37 +0000

Running a business means setting clear goals that you would like to achieve as a business owner. Whether that is to provide services or manufacture products, you must have a defined target and strive to reach it. Certainly, one of your goals should be making money i.e making a profit, since there is no future in a business that is repetitively not profitable. Focusing merely on the sales you are generating won’t give you the full picture. Hence, the way to success and money is through knowing your costs. In this blog, I am going to explain the different types of costs and how they behave in different circumstances. The importance of knowing your costs The sales that you make are not your profit in the business precisely because of the costs you have. Once the end customer has paid you for the product or service that you offer, the money you receive needs to cover the expenses that you encountered in the process of production. Now, these expenses are what I call costs. By knowing your costs, you will know what you are left with from the sales. In other words, you will know how much of your […]

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