There are so many factors that go into making up a successful business. You’ve got to have a lot of things in place including
- The right product or service
- The right people to deliver it
- The right leadership
- The right systems and processes
- The right messaging to attract clients and customers
- The right mediums for getting that messaging to your potential clients and customers.
And that’s all before you start looking at the more nuanced but equally crucial areas of the right culture, the right mindsets, the right values.
Looking at it from that perspective, you could be forgiven for thinking that so many things have to align, that it must be almost impossible to create a successful business. It certainly highlights that business is not easy and makes it more understandable why ultimately only one in 10 new businesses survives their first 10 years.
A lot of SME business owners are making things more difficult for themselves than they need to be though by not collecting the knowledge that can help them move towards getting all of those things right sooner.
So where does that knowledge come from? It comes from data.
There are numerous potential sources of data for any business that can be used to help accelerate their growth. From straight forward things like gross profit margins, overhead costs, cash in the bank and average sick days, to the use of advanced technologies such as heat mapping in retail stores to see which parts of the store are most frequented, or using preventative maintenance monitoring devices now coming online to minimise downtime or disruption due to mechanical failure.
The truth is getting to grips with data and numbers is one of the key factors for any business owner to unlocking the knowledge that can both help them sleep peacefully at night and accelerate growth in the day.
“You cannot manage what you cannot measure” Peter Drucker
Where are you now and where can you go?
One of the key things data tells you is where you are now. Knowing figures like cash in the bank, monthly profit and loss, amount owed to creditors, amount owed by debtors, debts in excess of 30 days old, value of current prospects and where they are in the sales cycle, anticipated conversion rates and previous years’ performance, all contribute to a picture of exactly what is going on financially within your business. They tell you if you have anything to be worried about or any potential problems ahead you need to plan for.
Similarly measures of client satisfaction, employee engagement and productivity can tell you if you’ve got any potential operational issues coming up.
And then numbers such as lead sources, cost per lead, lifetime client values, client profiling, and lead type against source can start to inform you where you need to focus and what it’s going to cost if you really wanted to start acquiring more of your best customers, and accelerate the growth of your business.
Some business owners take the attitude that “I’m not interested in numbers I’m just here to sell and get the job done”, or “I’m no good at numbers” so when they see a page full of numbers it makes their head want to spin. Others just feel dread and think “where do I start?!”
The truth is, most business owners know they should be looking at the numbers, but many start businesses with limited or no financial experience, which can mean they are less likely to be good at identifying the key numbers. In fact many will want to outright avoid them. If you’re not used to looking at numbers and data, it can seem a bit intimidating, but numbers don’t have to be scary or complicated. And when you start to look at them and understand them, you can see that they don’t have to be boring either. The key thing is understanding what you’re trying to measure and why – that’ll give you the motivation to do it.
For instance why is it important to measure lead sources? Because then you can go and look at how much you spent acquiring that lead. If you spent £500 on pay per click adveritising on Google and one person ultimately became a client off the back of seeing a google ad, that could be a great result or a terrible one. If the lifetime value to you of that client is £20,000, it’s a great result – so you can say let’s go do more of it, if its £20 it’s not so good and you should probably consider other channels.
Ultimately, without looking at the numbers, you end up managing your business on gut feel and overall bank balance. If that’s the case you may not really know what’s going on. You could have one very successful product that’s propping up a bunch of other loss making ones. In such an instance, you could have a much more successful company simply by discontinuing the loss makers.
The problem is, without looking at the numbers, you don’t know whether you’re focusing on selling the right products or services. You don’t know if you’re focusing on selling to the right customers. You don’t know if you’re leading in the right direction. Numbers give you knowledge about what’s going on in your business and that knowledge is power if you want to really accelerate your growth.
But in order to have the numbers to look at, you’ve got to be recording them in the first place. This takes time and discipline. One of the key areas of the tool we use in our Business Growth Club and when working with a lot of our one to one clients are the BGIs (Business Growth Indicators). These basically are the numbers that tell you if your strategy is working. By working with our clients to make sure this data is being recorded, it not only tells us where they are now and if what they are doing is achieving the desired results, it is also helping them to build up the knowledge bank they need in order to be able to make the key decisions that will enable them to really accelerate their growth.
As a demonstration of the value and simplicity of numbers and what they can tell you in your business, we’ve created a little calculator on our website to tell you how many new leads you need this week, in order to generate the amount of net profit you want to earn over the next 12 months.
Look out for the email next week with the link and have a play with it – we promise it’s not complicated!
If you’d like to find out more about our services, check us out here.