When I say you have to know your numbers, I don’t mean you have to know every penny you’ve spent on your business since its start (though if you do, more power to you!). I mean you have to be able to have your hands around the data that informs the numbers in your business. Now don’t freak out, because this is already something we’ve done as educators! 

The best teachers, the best school leaders, could not only speak to student data to say what percentage of students were at mastery, but they could drill it down to the standard, they could drill it down to the question, they could drill it down to the student. And so it's that same level or same grain size of data and understanding, that you can translate into your business, of being able to know exactly how much money you have on hand, how much money you’re spending by line item, is the equivalent of being able to say, "We have five students who have not yet achieved mastery on this standard. These are the names of the five students and this is the substandard that they're going to need additional remediation on in order to push them into mastery."

It's that level of sophisticated understanding of your data that you already have as educators. It's the same thing in your business. I’ve worked with clients who have already had their own clients, but when I ask them what their monthly revenue, or expenses are, they don’t know. When that happens, I’m basically like, "All right, I'm glad we know that you don't know and now we need to fix that. Let's put a system in place because if you can't name those numbers, what that tells me is that you don't have the appropriate accounting software in place in your business." I can help you with that, I can support you with that.

Knowing what’s coming in and going out is just step one. That's just the standard level of knowing your numbers. Once you begin to know the actual line items of your profit and loss statement (P&L) you get an even better overview of your numbers because it literally tells your your revenue and expenses. Here are a few line items that are on my P&L:

• Contractors 

• Software

• Licensing

• Payment Processor Fees: processors like PayPal and Stripe charge a fee. You should always be tracking those fees in your accounting software because those are tax deductible!

• Travel

• Meals

• Payroll

So we have tons of different line items in our P&L, and I can tell you what our biggest line item is, what we spend the most money on, I can tell you our top five line items. So that's the level of clarity you need. Again, we already do this as educators which makes it that much easier to translate to your business. 

So know your numbers. It’s just like knowing your data as a teacher. As teachers, in order for us to know our data, we needed to have a data meeting, we needed to have a data day or whatever. At my building when I was a principal, we called it a data day. We need that uninterrupted time to look into your data. I do the same thing in my business and I encourage you to take the time to do so as well! 

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