The topic this time is “7 key numbers you should know”
There are probably quite a few more – but I like to start with these when talking to a new client – to get a feel for their business.
With small business owners the conversation can be incredibly revealing! Some rattle off the numbers – which shows that they understand their business, whilst others – well let’s just say they can be quite hesitant!
I am not really talking about your turnover or even Net Profit – those are often just reported on once a year or once a quarter (although more frequently would be better!) These are numbers that should be central to your daily business and your regular planning!
So let’s get started!
- Number of customers – well that sounds like an easy question! But in fact it can be tricky depending on the business model. What is a customer, do they buy once or can they come back time and time again? It’s also handy to know how many “lapsed” customers you have – can they be resurrected!? Or can you sell a new product you now have?
- What is your top-selling product by percentage of turnover? Asking this question reveals a lot about the business. Do you know the answer to this off the top of your head – or if you do the calculations will it reveal something different? If your topselling product represents 86% of your turnover (for example) is that a good thing – might you be too exposed? Was that question easy to answer?
- How often do customers buy from you – how many times per year? Useful to know – when thinking about increasing sales! Your business model might not have “regular” customers – is there a way you could have – memberships or subscriptions for example?
- What is the average value of a sale – webshop, invoice value, whatever – do you actually know? Again – useful for calculating how you can increase turnover (more later). How long did it (or would it) take you to calculate that – do you have systems in place to make it easy to generate these figures?
- Number of leads / prospects – this depends on your business model – so may not be relevant – but you want to have a pipeline – even if you sell online – how are you attracting people and how do you measure it? If you are B2B with a sales process can you tell me your conversion rate?
- How long to close a sale – how long does it take for people to come to a decision – if they show interest today?
- And finally – yes – annual turnover!
I have a spreadsheet that we can plug these numbers into. You can then increase the number of customers / the average invoice value / the frequency of purchase and see what happens!
People can be so totally fixated on finding new customers that they forget they have loyal clients out there already whom they could sell again to, or sell a different product to.
So – let me know whether you are able to answer these questions easily and of course get in touch if you’d like to know more.
If you would like a copy of the spreadsheet then please do get in touch. And if generating the numbers is difficult then maybe we need to have a chat.