If You Don't Know Your Numbers, You Don't Know Your Business
This is one of the biggest issues for business owners who are stuck working in their business and not on their business. Now, most business owners know their revenue numbers, their labor numbers, and their bottom line, but they don't know the numbers that count.
I was talking with a good friend this past week and he has been stuck at the same revenue for the past 7 years. Before the recession of 2007, they were doing 1.3 million and since then they have bounced between 900 thousand and 1 million in annual revenue. So I asked him the question that I ask all of my consulting clients: WHY?
He gave me the answer I almost always get when I ask that question: “I don't really know.”
After that, we started diving into the different areas of his business and he didn't know hardly any of the answers to the questions I was asking in regards to the business’s numbers. Because of this incident, I felt like sharing the process I walked this very business owner through so that you can implement this process on your own. Who knows! Maybe you’ll learn something you didn’t know about your own business! It all boils down to essentially reverse engineering your outcomes so that you can better understand how you need to adjust your inputs.
Tidbit for today:
If you struggle to achieve your budget in your organization, try the following diagnosis questions out.
What was the goal for the month?
What was the difference between your goal and the actual amount achieved?
What was your actual total revenue and how many sales orders did it take to accomplish that revenue?
Were you staffed to handle the amount of sales orders you needed, or could you have accomplished more lead flow by being properly staffed?
Did your marketing strategy drive in enough traffic to achieve your budget?
Did your salespeople handle that traffic efficiently?
Are your sales peoples’ close rates in line with industry standards?
By starting with these simple questions, you can start to dissect your operations. This process can be used for any part of your business. Start with the end in mind and work your way backward. Then, measure where you are currently and where you need to be to to achieve your goals. It really comes down to knowing your business and knowing which levers you can pull to impact the goals you are trying to achieve.
Enjoy!
