Business is about numbers and every business has a key set of numbers which tells a good manager how the business is doing.

A seasoned manager who's been in the same business for a bit could run that business by looking at those numbers each day. The trick is first to figure out which are the key numbers for your business. They might be the number of papers you sold that day, or the volume of visitors to your web site, or the amount of ad revenue you brought in that month. Whatever they are, you need to single them out, perhaps by seeking a point of reference such as a comparison with trade data of your industry. If every other major business in your industry needs a 50% mark up to survive and you want to do it on 20%, you better have a very clear reason why.

And of course, you can't possibly know if you're making a profit if you don't know what it's costing you to run your business. You may actually be losing money. In fact ,Inc. Magazine had a feature story, Are We Making Money Yet?", which detailed one women's near death transformation from salesman to CEO when she finally puts pencil to paper to discover the real cost of a bike delivery in her mushrooming, but financially challenged delivery business was not the assumed $4.46 per delivery, leaving $. 23 profit. The real cost was $ 9.24 per delivery with an actual profit of -$4.55 . That is not the kind of situation you make up by volume. And it is a lot more common than most people, including business people, realize. Fortunately, getting these numbers turned around is not really that hard if you have a clear idea of the true costs. A little creative redeployment, some adjustments, and , believe it or not, turning away business--unprofitable business-- developing a plan based on the true financials and having the discipline to stick to it usually turn the tide and put you on the road to profitability.

So keep an eye on your gross profit. Focus in on your cost of goods and costs of sales. Don't take a contract just to get a contract. If it doesn't make a sizable enough profit, you don't need it. Know how much you need to break even every day. As painful as it may be in the beginning, create a budget and compare it with your actual revenue and expenses. After the intial shock wears off, things will get better. You will get a handle on the dynamics of your cash flow and that act alone will both improve your business and improve you as a manager, the beginning of a very positive and powerful cycle.

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