Watch Your Numbers!
Business Lift
In Effectiveness, Financial, Marketing, Sales Posted September 02, 2015
What got you started in your business? Where is it going now? Do you know? Is it what you originally intended? If not, why… what happened? If it is going as planned, then what’s the next step and how do you go about implementing your strategy?
What most people are looking for in their businesses, and often in their overall lives too, is certainty. Certainty now and certainty about the future.
How then do we bring about this certainty that we are longing for? Often I find that clients are feeling anxious about their business and about its future, however after asking a few questions I discover that they are anxious about not knowing what they don’t know. That might sound strange, however they seemed to be concerned but don’t know what about or why. They feel they just might have a blind spot and be missing something.
I’ve discovered that when business owners start to measure some Key Performance Indicators (KPIs) and have staff report them periodically it provides more certainty and less anxiety. Wouldn’t you have a better weekend if your staff shot you the key numbers each week that indicate how your business is tracking? Even if the numbers weren’t hit target – at least you’d know, right! Surely this is better than not knowing. At least you would understand what is required to get back on target – and you could stop worrying about what you don’t know.
Here’s what I would consider the…
The Top 7 Numbers to Watch in Business
1. Total Sales
This one sounds obvious, and that’s because it is. Do you know…
a) What are the best-selling lines in your business?
b) What have the highest value?
c) What is your target sales per product line?
2. All Other Revenues / Income
What other income does that business receive on a regular basis? Is this predictable or spasmodic? Are there ways to increase this simply and easily without putting undue pressure on the business?
3.Cost of Goods
This is the cost to produce products and services you are selling. Do you know how much it costs the business to delivery its services? Can you reduce these costs by negotiating better terms with suppliers? This is one of the best ways to drop profit straight to your bottom-line!
4. Expenses
Analyse each expense…
a) Start with biggest expense
b) Cascade down
c) How can you reduce costs without reducing quality or value to customer?
d) Review expenses regularly – ideally by comparing your budget (the plan) verses your actual outcomes on a monthly basis.
5. Salaries and Wages
Do your staff expect a pay rise at every review? Do they have clear job descriptions and are you reviewing their performance regularly against their core functions in the business? Do your staff know when they have had a good day performance wise? Can you easily identify when they are under-performing or over achieving? Regular staff reviews are very important, for both their benefit and the businesses.
6. Lead Generation and Costs Per Lead
Your business is the business of ‘buying customers’. A lead is a prospective future customer. You must be able to buy leads at a cost lower than it costs you to deliver your product or service, or you’ll end up going out of business! Once you know this, you’ll know how much to dial up or down your spending on marketing based on the results you are targeting.
7. Conversion Rates
Measure what the conversion rate from is from lead – to enquiry – to becoming a customer? Then…
a) How much do they spend?
b) How much do you earn per customer?
c) How much profit do you earn?
d) How quickly do they pay?
e) How do you increase your conversion rate dramatically?
Do you need help with knowing what to measure and in understanding your businesses numbers? Contact Business LIFT Coaching & Consulting on 1300 713 929 to arrange an introduction meeting and discover if we should be working together to lift your business to the next level.