Tracking the Numbers That Matter Most for Your BusinessApr 23, 2023
How many times have you said, "I'm not a numbers person?"
Seriously, nobody ever says, "Woo hoo! Let's get some drinks after work! We can talk about conversion rates and manage our expenses!"
If you're in sales, marketing, or entrepreneurship, you may dread doing the books. Product passion doesn't translate to QuickBooks or accounting.
As women, we sometimes lack the confidence to take responsibility for the numbers that reveal the health of our empire.
Learning the numbers of your business is your obligation as a business owner.
Tracking the right numbers will predict your future—and that of your entire team and their families.
Track the numbers you can control
➥ Lagging Numbers
When you track year-over-year performance in specific areas and when you're measuring how close you are to a specific goal, you're most likely looking at lagging indicators. Revenue, profitability, and payroll are all examples that measure our performance over time.
What you get is what you got.
➥ Leading Numbers
You can predict lagging numbers when you track specific day-to-day and week-to-week data. These are the data points over which you control revenues, profitability, and income.
Leading numbers can be:
- Leads (may be the same as contacts)
- Appointments booked
- Contracts signed
Conversion rates across your sales pipeline tell you where to focus your attention and, with performance history, predict the lagging indicators six months or a year from now.
Sales and revenue numbers are sexy.
These are the numbers you throw around for fun over coffee. How much revenue did you generate this month? When you’re on a roll, these conversations are fun!
Expenses? Not so much. Still, knowing and managing expenses is essential to running your business.
Profits are what’s left over after taxes, overhead, and payroll.
6 steps for empire builders who want to start predicting the future of their business
1. Share responsibility for the financial health of your business.
"I'm not good with numbers" doesn't cut it. You can learn.
2. Start tracking one number.
Don't use this newsletter as a rationale for implementing a complex system. Start tracking a single performance number.
3. Include your team.
Ask them to track and report specific areas of performance. Ask for insights. Where can the business cut expenses, create efficiencies, or generate revenue?
4. Praise your team.
Celebrate their performance, their recommendations, and their willingness to take a moment and track the number you've chosen to collect.
5. Tie your pay structure to profitability.
When your team members share in the bottom-line performance of your business, you simplify decision-making and provide incentives to maximize sales and hold down expenses.
6. Find a mentor.
You will gain confidence when you receive one-on-one guidance.
Someone who is not emotionally connected to your business can tell you where and how to make improvements and challenge you to reduce expenses.
You're busy building an empire, juggling responsibilities, and managing your daily life and work. Implementing all six of these recommendations is unrealistic. Instead...
- Implement one thing you learned today.
- Have a conversation with a team member.
- Make a list of people who are terrific financial mentors.
- Invite a friend or family member for after-work drinks to discuss profitability and expense management.
Just do one thing today that helps you gain confidence and control over your future.
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