Everyday as a business owner, you have to focus on so many different things, but today let’s talk about…NUMBERS!
Welcome to my new business planning series, where for the next few months, we are breaking down one piece of your business and discovering how to streamline your work around it for the most effective results.
Let’s think of your numbers as a train and YES, yes are the conductor. The conductor is in charge of the train, including the cargo/freight it’s carrying; the passengers and crew; and that it arrives at its destination safely.
You are in charge of your services; your clients and team; and your long-term vision and destination, so it’s very comparable.
Each car in your metaphorical train carries something important, so let’s take a look inside.
The front of a train includes the engine and it gives it all the power. This is your brain. These are your ideas, your passion, your skills. You started your business because you were fueled by something – be it financial, creative, need-based, etc. And that will grow and change over time.
The other cars in your number train come in no particular order, because on certain days, they can shift in importance depending on various factors.
Stats and Analytics.
I’m big on statistics and I track a lot of different data for my clients and compile reports. I also do the same for my own business, as should you. A few items to track would be open rates and click through rates on your newsletter; traffic to your blog; where the traffic is coming from; what pages are being visited; how long people are staying on your website; what they are doing when they are there; how many subscribers you have and if you get new ones as consistently as you get unsubscribes; your social media numbers and what posts are performing well; your website traffic and what someone is doing when they get to your site; how many people are opting into your free gift and if they are taking action afterward. Knowing all of this data can, and should, be used in future decision-making. For example, do you need to work on better subject lines, are your free offers the ones that your target market wants and needs? Is your content of value to your audience? Should you test new content and/or frequency/posting times on social media? Three things you should do every week when it comes to stats:
- Set up or update your Google analytics. When I first started my business in 2014, tracking marketing data was a suggestion. It is a service I have offered my clients from the beginning but in the past, it was viewed as optional. Now it is imperative to know if your marketing efforts are driving traffic to your website and to make better decisions. In a recent blog post about the evolution of search, Neil Patel wrote about using Google Analytics to measure user interactions as a way to better understand target audience and to shape better-informed marketing strategies.
- Update your content calendar. Include copy and images for social media and subject lines for newsletters. I like to add in monthly engagement rates, too, to serve as a quick reference to determine how well things are doing at a glance and notice trends.
- Track how your freebies are doing. Engagement tends to wane over time, so you’ll want to know when it’s time to offer a new freebie. Provide consistent value and track monthly performance data.
Bookkeeping.
Whether you do this yourself or have someone on your team in charge, keeping your financial records in order is extremely important. Receipts, deposits, invoices, expenses, reconciling bank accounts, monthly statement reports, etc. Three things you should do every single week:
- Run an income report. Make sure all invoices are paid. Knowing if one hasn’t been paid helps you follow up quickly and prevent extended accounts receivables. Running an income report also lets you see if you are on target with your financial growth goals for the year.
- Run an expense report and file your receipts. Staying on top of your expenses is key to increasing profits and the short- and long-term sustainability of your business, as well as protecting it from market and economic fluctuations. When the economy heads south, it helps to know where you can reduce unnecessary expenses to make it through the downturn. For me personally, the last expense I want to cut is my team, so it’s important to know where I can cut to avoid that.
- Track your personal expenses. This is related to tracking your business expenses in that you need to know what you can easily cut if you must. It’s also related to your business investments. I love Starbucks, but if I went there everyday and totalled up the yearly expenditure for that, I might reconsider that daily trip and make it an occasional treat instead, so I could allocate that money to a business investment.
Services and Pricing.
You set pricing for your services when you first started your business. Have you increased them? Have you taken a look at the actual work you do and if the numbers are lining up to the value? What makes the most sense for you? Project-based fees? Hourly? A retainer? Three things you should do with respect to your pricing:
- Track your time. Not that you want to base your services on time, but it establishes a good baseline to know how long it takes to complete a task or project. Basing your pricing on value is better because as you get faster, it will take you less time to do something, and you’ll end up making less money. Retainers or project fees work best because pricing by the hour tends to attract clients shopping for a bargain. Budgeting is also easier when you know what you are bringing in each month and easier for your clients, as they know what is going out. Tracking time also helps in your decision to hire more team members.
- Review your offers and the revenue they bring in. What trends have you seen over time? If you are a coach, what is the ROI on your group coaching programs? Is there a potential to create a new offer for these clients to help them transition to higher level 1:1 coaching? Do you have a subscription-based online training program? If so, what is the average length of time a client stays in the program before canceling? Do they actually engage in the training, and if so, when do they drop off? This helps you evaluate how effective the program is, who is the market for it, and if you need to level up the program. If you are a speaker, how much time and money does it take to land a speaking gig, training event or facilitation opportunity? How much time, knowledge and money does it take to implement? This should all be factored into how much you charge for the event. If you track your offers or services, look for how many clients you have for each and how much revenue each one generates. Over time, you’ll see what to continue with, what to get rid of and what to revise.
- Create packages. Package pricing is easier and offers the most benefit for you and your clients. It enables you to move away from hourly pricing, if that’s how you started in your business. Structuring basic packages makes it easy to offer custom packages and make sure that the price point is right for your target market and for your business. Setting pricing is not just a matter of pulling a number out of a hat and saying this is it. Pricing should be based on value provided and knowing your numbers will help you get it right.
Investments.
New software, hiring team members, attending an out-of-state conference. Three very different things, but all investments to your business. These numbers are complicated. They are payroll and expenses and travel and training and many other things all rolled into one. How do you know when it’s time to invest? Or what to invest in? Three things you should do to help you decide if an investment is right:
- Look at your numbers. The previous year’s profit/loss statement will give you an overall view of how much profit you made for the whole year. To break it down to a more micro level, look at each month’s profit to see any month’s trends you want to be mindful of. Then look at your current month’s profit to see where you are right now. How much profit did you have last year? After paying yourself, how much was left? That will give you an idea of how much you can likely invest in the current or upcoming year. If it’s not where you want it to be, growth increases should be factored into your short- and long-term plans.
- Consider your needs for growth. Look at what’s happening in your business. Have you gotten to the point where to continue to grow, you need to start delegating? Invest in a team member where you can use the most assistance. Do your clients have additional support needs that you can fulfill? If so, you may need to invest in additional software or upgrade current software packages. You may even want to add a completely new offering. Last year, Done4U™ added Quickbooks Certified bookkeeping to our offerings because of client needs. This year, I’ve invested in Loom to create training videos for my growing team. Do you want to increase the value that you provide for your clients? Consider what conference and training will support that goal. Perhaps it’s time for a specialized certification.
- Set your priorities. After you consider your growth needs, list them in order of priority. Then list the steps you need to take to make it happen and take action.
Numbers drive everything.
Next month, we chat in more detail about outlining your services, programs, products, or offerings as we continue this business planning series.