Why?
Time goes by very quickly and before we know it a month has passed, then a quarter and a whole year. Meanwhile you’ve been busy with your business; delivering to your clients, doing the business admin that seems to engulf soooo much time and also squeezing in some business development activity too.
But do you know what you actually accomplished?
I bet you’ve just thought about your bank balance and whether that has been as high as you wanted it to be, but there are several other specific “things” you also need to consider that combine to let you know how healthy your business is.
You’re talking numbers and I’m bored already!
Now this is incredibly important. I know the idea of spending 30 mins working out some key numbers for your business may not sound like the best use of your time BUT it could radically change your focus for 2016.
I’m a big believer in “gut instinct” and I know many a business owner that relies on their perception of their business performance rather than the actual hard cold data.
Instinct is great for some business decisions but when it comes to knowing what’s been the most successful marketing strategy, how much profit you leak every month, how many enquiries you need to hit your targets, and so on, it often gives you the wrong answers.
Instinct isn’t reliable
Why is that? My personal view on this is that as your instinct is directly related to your view of the world it’s easily skewed.
Here’s an example…let’s think about the most successful marketing strategy you used in the last 12 months. What was yours? There’s an incredibly good chance that the one you just thought of is one you enjoy doing. Am I right? If you sat down and worked out where every new enquiry has come from in the last 12 months would it give you the same result?
Here’s an example that happened in one of my client meetings this week:
The question was: What was your total revenue for the last 12 months. He guessed it was £X,000 and then he looked it up and found it was £X,000+another 50%!!
What wrong results are you basing your decisions on?
So what instinctive answers are you using to underpin your business growth? How far out might they be to the real answers?
Time to take stock
I’m a HUGE believer in baselining business performance so you know exactly where you are which in turn tells you the gap you need to close. So let’s baseline your business performance.
For the last 12 months work out…
- Total revenue
- Average revenue per client
- How all your enquiries originated
- Conversion rate (enquiries to clients)
- Length of time from initial enquiry to work commencing
- Seasonal variation in enquiry rate
- Seasonal variation in date the work commenced (my assumption here is the Summer wouldn’t have seen many new clients but let’s see what the data actually says)
- Number of billable hours delivered versus the number of billable hours available
- Total costs
- The biggest 3 costs besides your time
What to do now
Now you have this data you can quickly plan what you want the next 12 months to be like and importantly, how much marketing, using which channels, you need to do to drive the rate of new clients you need to have to reach your targets.
You’ll also know which months you need to focus on that marketing effort the most.
It might even inform a decision on increasing your pricing.
Don’t overlook the cost aspect
There’s a good chance your costs are higher than you want them to be. It’s a good idea to work out your cost per client (eg if your main source of clients is via networking then how much has your networking cost this year, divided by how many clients it generated will give you your cost per client).
Just do it!
This task should take ~30 mins depending on how many clients you have. This 30 mins will underpin your success for the next 12 months. That will be a very well invested 30 mins!