When you are running a business, most of the time you are focused on three things: getting more customers; increasing sales; and earning more profit. So when, for example, sales are not really happening, I find at The London Coaching Group that most business owners start "reacting" and implementing activity to get more customers. "Let's run an email campaign", or maybe "Let's do some SEO" or "Let's get on the phone and call some customers."
A lot of random approaches start creeping in to their marketing activity – and it starts to get messy. What needs to be understood here is that these three things are important, but at the time of setting goals – when you are clarifying and planning the destination for your business.
From a day-to-day and marketing point of view, however, these are not what you should be focusing on. The really important considerations are the items that lead to these outcomes. "Of course" most people say, but I assure you, most businesses do not focus on the right variables on a weekly basis.
The main thing you need to get into the habit of is measuring and managing the Five Levers that lead to these outcomes:
- Number of enquiries
- Conversion rate
- Number of transactions
- Average sale value
You can download a one-page PDF of these Five Levers of growth here, with an explanation of each one. You should print this out and stick it up on your wall to constantly remind you of where your focus should be.
But the real key to managing these figures is to ensure you have a weekly business dashboard where you are gathering and monitoring these important stats. There are two main reasons that I believe almost every business owner should have a weekly business dashboard:
- It allows you to have a weekly overview of the measurements that matter in your business, and lets you catch any problems before they become catastrophic.
- If and when you get a business coach, business mentor or investors to take a look at your business, having this habit in place will ensure they can get a quick and meaningful look at the business's performance. This will allow them to help you identify what is and is not working, where you should be focused, and the areas where you can improve in order to get better and faster results.
If you do not have a weekly business dashboard, then the truth is that you are not staying on top of what is happening in your business. This may be ok, because your business is operating fine right now, but as soon as something is not operating properly, instead of catching it at the start, it could become a major problem before you even know it is happening.
Here are a few of the must-have elements on your weekly business dashboard:
- Gross margin percentage or "ratio" (gross profit divided by net sales)
- Orders taken
- Average value sale (revenue divided by orders)
- Leads generated
- Cash in bank
- Debtor amount (the amount of money owed to you)
- Creditor amount (the amount of money that you owe)
You will notice that this list does not include things such as conversion rates, which lend a deeper, richer analysis. That is because the weekly dashboard is not intended for that, you should be using those in your monthly dashboard. On a weekly basis, you want to review these eight pieces to get a quick overview of what is happening, and ensure you are on track.
Ideally, you should be measuring these against targets, which you should determine at the beginning of the year, or the quarter, as a part of your strategic planning. Creating a weekly dashboard is one of the first exercises I do with new business coaching clients. Not once have I had a business come back to me and tell me that keeping that dashboard maintained was a waste of time.
On the contrary, I have had multiple clients that have come back to me years later to let me know that they still use their weekly dashboard, as it really is the perfect way to keep on top of their business.
With the coming of age of a few businesses dashboard specialist companies, which allow data in businesses to be measured and reported event on a real-time basis, there is really no excuse today to not have a dashboard in your business.
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- Investment advice for start-ups