Know Your Numbers: 3 Steps to Create a Thriving Business
So you came up with your business plan for a product or service to change the world. You put in the hard work, launched your business and maybe encountered a few setbacks along the way. If you have not yet experienced the astounding success you imagined, don’t let it stop you from making your dream a reality.
I’ve spent three decades helping business owners leverage success and create solid, thriving businesses. The difference between those who have a dream and those who can make their dreams flourish often boils down to three areas: getting the support they need, focusing on sales, and knowing the numbers that are critical for success.
Here are three steps to put you on the path to a thriving business:
1. Set Up Systems for Support and Accountability
Your business idea might be unique and brilliant, but without proper guidance, you may find yourself spending money and spinning your wheels. All major businesses have advisors who help them plan and execute their strategies. No matter what your business is, a proper support network is crucial. Mastermind groups and direct one-on-one strategy coaching with an expert can make a big difference. The collective mastermind is essential to helping you with accountability and support and a top-notch strategist can keep you out of the weeds.
2. Put Your Sales Plan on the Front Burner (and Start Selling)
Too many business owners put off sales while focusing on other areas of business development. People get stuck in designing a logo, building a website, and all the other minutia of building a business and often delay sales until everything else in in place. The problem is, building a business is an ever-evolving process that’s never truly finished. I’m not saying you shouldn’t have a great platform, a good website, and a solid plan. But those tasks should be happening the same time you are bringing in revenue. Focus on building sales and income from the start because they are the lifelines of your business.
3. Track Your Numbers
Success is a numbers game. From the moment you start your business, there are things to measure, including sales, leads, calls, clicks, and conversion.
Are you counting the right things?
Are you measuring daily?
Do you know your numbers?
Some of the most important areas to measure are:
- Revenues and Expenses – Be clear on how much money you are generating vs. how much you are spending to maintain a clear picture of your operating costs. Develop daily, weekly, monthly, quarterly and yearly spreadsheets to track how much you are spending and making. A simple review of your bank and credit card statements will give you the numbers you need. These numbers can help you tighten up expenses, increase efficiency, and find creative ways to boost your bottom line.
- CAC – One very important number is your Customer Acquisition Cost, or CAC. How much does it cost for you to get one customer? CAC = All Sales & Marketing Expenses / # of New Customers. Some common sales and marketing expenses include paid advertisement, sales and marketing staff salaries, CRM and marketing automation software licenses, events, sponsorships, gifts to customers, content production, social media, web site maintenance, and more.
- LVC: Lifetime Value of the Customer – Roughly defined, this is the projected revenue a customer will generate during their time with your business. How much can you expect to earn from one customer? What is the sales cycle after the first purchase? Determine how you plan to move them through the funnel for future purchases.
Here’s a simple formula to calculate this number:
(Average Value of a Sale) X (Number of Repeat Transactions) x (Average Retention Time in Months or Years for a Typical Customer)
- Lead List Size – This number will tell you how many prospects you are adding to your funnel each day, and it should grow daily. Keeping track of the number of fresh leads will help you streamline your prospecting activities and create more ways for those leads to get into your funnel. List size matters in most businesses. A business without a growing list will soon exhaust what they have and end up in crisis.
So get the support you need to create the strategies that will make your numbers grow. Don’t neglect your sales process while you are building other important systems in your business. And as you track all those numbers, get clear on where you are and where you want to go.
These are the key ingredients in a strategy that can help you grow your business by leaps and bounds.
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- Know Your Numbers:3 Steps to Create a Thriving Business - January 15, 2016