Numbers You Need to Know to Grow Your Business
MAY 2, 2017
If you’re a typical entrepreneur, you’ll probably have the confidence, intelligence and go getting ability to execute your business plan. If you have all those qualities, plus one more critical element, then you have brilliant chance at achieving your business goals. The problem is, this one critical ingredient often gets the least attention. So what is this all-important ingredient? Having a complete understanding of the numbers that drive your business.
Entrepreneurs are, by nature, focused and driven. They’re focused on the next product and the next sale, yet when asked what last month’s sales were, or what accounts receivable are today, or yesterday, they may look at your blankly as they are simply focused on the money they brought it.
Even though the numbers are the tools that help manage & drive a successful business forward over the long haul.
If you’re a business owner small or large you need to know your numbers! Its critical. But before you get into the numbers its important to review your processes and your levers and learn from them.
- What went well
- What did you learn?
- What were your 3 takeaways?
- What did you earn?
- What were your earnings vs target?
- What are the gaps?
- How will you plug the gaps?
Below are five ways that tracking your numbers will benefit your business:
1. Know how far you are from reaching your goals.
There’s masses of research that proves without exception that people and organisations who set goals are much more likely to achieve them. However, to achieve a goal, you must be able to properly measure your progress. By understanding how your business is doing in both revenues and profits daily, you can tell if you’re on track to achieving your goals and adjust your plans as needed if you’re not.
2. Pinpoint and manage key underlying issues.
There are a handful of smaller activities that effect larger results. For example, the following are often key underlying issues for sales:
- Number of outbound sales calls
- Number of connections
- Number of proposals / pitches given
- Conversion rate
- Average price per sale
- Average time to sale
When sales are low, most entrepreneurs don’t know what to fix to see improvement. By tracking each of these numbers, you can instantly know what to fix and what levers to pull, tweak and move.
3. Identify the issues quickly.
Most entrepreneurs have had a poor and frustrating sales month, then look back to determine what caused it. If they had tracked the numbers regularly and picked up on the issues, they could have fixed the issues promptly.
4. Quantify what works and what does not – quickly.
By understanding and tracking your numbers, you can measure whether your business is performing well. For example, if your sales team made 500 outbound calls already, your number of customer complaints is less than 10, and your average delivery time is less than seven days, you can rest assured that your business is running smoothly.
5. Seek constructive feedback.
Tracking and knowing your numbers is a sign that you have control. When you review your business and know your numbers, seek feedback from your customers and colleagues on what is working for them and what is know. Know the whole story – not just the version you tell yourself.
Health warning: its all about the balance, there’s no point knowing all your numbers and having brilliant spreadsheets, KPIs to die for and pie chart and Venn diagrams in pretty colours if there are NO numbers. Don’t get sucked in with the paralysis analysis.
Those who spend a reasonable amount of time knowing their numbers and reviewing their business – I’d recommend an hour a week. Best to know your numbers and not have any surprises when you have to pay your bills and yourself at the end of the month!
The numbers you need to grow your business are different for everyone, focus on the ones that work for, and that will drive your business forward.
Have an epic week everyone.
Hugs…
