If you’re anything like I was when I got started, the very idea of tracking business financial metrics makes you want to curl up in a ball and hide under the covers. You are not alone! At least 80% of my current clients are scared of their metrics and feel overwhelmed when they think about ‘crunching numbers’.
Yes, numbers can be scary. But there is no better way to get a clear picture of the health of your business than to begin tracking your numbers on a monthly basis. Remember, numbers don’t lie. They don’t sugarcoat. They tell you what’s working, what’s not, and what’s a waste of your hard earned time, money, and energy.
Besides, you’re a mompreneur! You balance parenting and running a business. You can definitely handle balancing a spreadsheet. So, if you want to feel empowered and in control of your business and your life, you will have to put on your big girl boots, pull out your excel spreadsheet, and get ready to crunch some numbers. You can do it, and I have some ideas for you to get started.
This is by no means a definitive guide, but I promise you that keeping track of these six essential metrics will help equip you to make great decisions for your business going forward. We’ll start with the easy stuff, and move on to the more complex material.
The Easy Stuff:
Revenue is just a fancy word for the amount of money our customers are handing over to us. Most of us keep track of our revenue because we like this number. It makes us feel good to be able to say: “I made three thousand dollars in sales this month.” If you’re not doing so already, make a simple spreadsheet for keeping track of your revenue on a weekly or monthly basis. Analyzing your revenue will help you see when your best sales season is, what your customer buying patterns are, and a wealth of other beneficial data.
New Clients or Customers
You should track this on at least a monthly basis. Knowing how many new customers you are getting can help you understand if your pipeline is healthy. Did you get more clients this month than last month? How about more customers this year than last year? If your numbers are trending downward, it’s an indicator that something isn’t connecting correctly.
This doesn’t mean you are failing. It could just mean that you need to make an adjustment in the way you market or promote your business. Tracking new customers can help you make an informed decision.
I ask all of my clients: where are you finding new people? Effective lead generation is absolutely essential to a business’s long-term success. Every month, ask yourself these questions: What are you doing to find new clients or customers? PR? Marketing? Networking events? Partnering with other companies? Social Media? What’s working? What’s not? You want to track this and compare your notes monthly. You can save yourself time and energy by putting
- What are you doing to find new clients or customers? PR? Marketing? Networking events? Partnering with other companies? Social Media?
- What’s working? What’s not?
You want to track this and compare your notes monthly. You can save yourself time and energy by putting the pedal to the metal on your most effective forms of lead generation.
If you did nothing but kept track of these three metrics, you would already be on the path to making great decisions for your business. But there are three other numbers I also encourage my clients to keep track of so they can really be in control of their business finances. Let’s call this the bonus round.
Your sales conversion percentage is the number of people who complete the desired action after receiving a special offer. Say for example you offered a webinar. How many people signed up for the webinar? Out of the people who signed up, how many bought the e-book or signed up for your masterclass? A healthy conversion percentage is 20% or higher and depends on what the conversion is.
It’s always more expensive to get new people in the door than it is to retain the people who are already there. If you don’t have good customer retention, try to figure out what you can do to let existing customers know how much you value them.
This is really important. What is it costing you to be in business? To figure out your profit margin, subtract your cost of goods sold from your revenue. You should always be left with a positive number.
These six simple spreadsheets will help you take charge of your business finances and make excellent decisions for your business. And if all of this still feels overwhelming to you, don’t hesitate to reach out to me.