Lee Kenny: Managing your business by Intelligence not Intuition
As a business owner I often make decisions based upon gut-feel, intuition if you like.
As a business owner I often make decisions based upon gut-feel, intuition if you like. It’s all part of risk taking and has certainly served me well when deciding on a new venture. However, the past 20 years has also been about studying the numbers. It brings out the inner-geek in me!
Peter Drucker is often quoted as saying “What gets measured, gets managed!” Many owners though manage their business by simply looking at what’s in the bank account today. While this helps with paying the bills, wages and other stuff it doesn’t provide a forward-looking view of how the business will perform I in 1, 3, 6 or 12 months’ time.
How’s your pipeline?
In sales it is common to talk about a pipeline. That is what business has been quoted for but not confirmed yet. If you have a shortfall of Â£10,000 against your target and you have only given proposals out in the market of Â£10,000 that are still to be decided upon, then you are very unlikely to hit that goal. Even if you manage to win 100% of what you quote, you still are back at zero for the following month and having to hustle, hustle, hustle!
Some businesses have a long sales cycle, which means keeping an eye on that pipeline on a daily basis is crucial. It tells you whether to double your efforts or whether you are on track. With just 1 business day left to go this month, many a sales person has simply left it too late to get the necessary activity completed to hit their goals and can look forward to an awkward conversation on Tuesday morning.
So how can this be avoided?
Know the Score: It may sound simple but starting to “know the score” is the first step. So many owners don’t know how much business was generated this month or year to date. Relying on the accountant or bookkeeper to manage those stats is ok, but it’s much better if you are tracking daily.
What’s the goal? Not simply to survive and pay the bills, but how much money do you want to make in order to thrive, expand and grow your bank balance?
The formula: Once you have that number it’s time to look at how well your business or shop does in selling. How many people ask for a quote or visit your shop each week or month? How many of those then purchase something? Finally, how much sales and profit does the average customer generate?
Now you have a formula to decide on next steps. If you don’t have enough prospective customers, the sales conversion isn’t your priority, it’s getting in front of more people. If you have 1000 leads or visitors each day but no sales, then focus your time on converting them in to customers, not driving more visibility.
Of course in an ideal world, you’d do both! Have a great week and don’t forget to tweet @socialsnowflake or comment on the SocialSnowflake Facebook page
Lee Kenny is a Halifax based entrepreneur, specialising in web design, online marketing and sales generation for small and growing businesses. @SocialSnowflake