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KNOW YOUR NUMBERS
THEN DO THE MATH
NUMBERS NEVER LIE (UNFORTUNATELY)
CORE CONCEPT:
How your organization uses data to support key processes and manage performance is key to the success of your company. Small business owners to large corporations need to track their numbers daily. They need to track raw data that has been verified to be accurate and timely, specific and organized for a purpose, presented within a context that gives it meaning and relevance, and which leads to increase in understanding and decrease in uncertainty. The value of information lies solely in its ability to affect a behavior, decision, or outcome. A piece of information is considered valueless if, after receiving it, things remain unchanged.
RESOLUTION:
You must keep an accurate and somewhat detailed log (written or on the computer) of all sales and revenue activity. By relying on the facts you will not confuse motion with progress and activity with results. As much as we want to, one thing a successful business owner cannot do is 'go with their gut' when it is possible to gather meaningful and accurate statistics. Unfortunately, numbers do not lie. Know your numbers including sale's sources, sales, revenue generated, cash flow, lost customers with documented reasons, credit card deposits, cash, bank deposits, number of staff members as well as how many leads you must actively pursue to generate one sale, the hits to your website, the conversion rate for those hits, etc. As your company grows you will have more data to track and you will need to expand your information and analysis windows to cover that data.
Information and Analysis is a two step process.
· Step 1-Track your data. A start up company will not have a lot of data to track but any data that can be tracked on a daily basis must be tracked daily (do not get behind!!). I am always amazed at how many owners I ask for basic statistics and they cannot give them to me. I knew every single day how many repeat clients we had booked. That number was the driving force behind our business. If the number went down I dug into the reason it went down that very day. If the number was not meeting our plan then I worked on sales immediately. I did not wait until the end of a month, quarter or year to realize that I was not attaining my plan. I also shared those numbers with my cleaning staff everyday by posting them on the wall. We had a chart with our sales, cancels and goal for each day. Actually, I think that chart helped me more than anyone. The first thing I looked at each day was my plan versus actual. It made me feel great when I was at or ahead of plan and it made me face reality every day that I was behind plan.
· Step 2-Don't just track numbers and not look at them. Once you have looked at them be sure to react to them. If you are just tracking numbers for the sake of tracking numbers then do not bother to track them. Analyzing your numbers can save you a lot of time and money. Your 'gut' can be a fooler. i.e. If you are running an advertisement in a paper or magazine right now you will probably get a lot of calls for quotes. If you are not running an advertisement right now your inbound call volume is probably still on the rise. Why? Because your phone rings a lot when it is back to school time, regardless of your advertising. If you are not tracking where your sales are coming from you will probably automatically think they are coming from the advertisement you are running. In reality, that might not be true at all. If you do not realize this fact you could continue spending money on advertising that did not bring you one single sale. Also, the advertising mode you are tracking and analyzing might be bringing you a great volume of inbound calls but it is not bringing you any sales. I found that out real early in the game. Yellow page advertising (25 years ago there was no internet and that is all we had) brought me 80% of my inbound calls but only 20% of my sales and the majority of them were one time sales. After that realization I always ran the smallest advertisement I could in the yellow pages. I needed to be there for prospects that were looking for my phone number but placing a large advertisement was just a waste of money. Those prospects took the majority of my time but brought me little money.
Information and Analysis is one of the 7 Key Factors in running a successful business. Start tracking your basic numbers today which are listed on our Daily Activity Log Spreadsheet or make your own spreadsheet and then post your goal numbers where you look at them every day. Analyze the numbers you have tracked on a weekly basis and make the appropriate adjustments to the decisions you are making based on those real facts and numbers.
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Sincerely,
Sharon Tinberg and Sharon Fliess
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