Yeah, I know what you’re thinking: “Tracking your numbers” isn’t exactly sexy, is it?
But you know, it is hands down THE most important part of ANY business.
Hear me out.
Without tracking – or, ahem, “accurate” tracking – how are you going to properly evaluate how well your business is performing in line with those goals that you set for it?
You just can’t!
So, we want to make sure this is 100% sorted moving forward.
That involves identifying what business numbers you’re currently tracking, what looks a bit funky, and which numbers you should start tracking.
I know that the topic of tracking and evaluating your business is possibly uncomfortable, feels too hard, or simply doesn’t interest you but it’s important to have in place to enable you to make decisions.
I LOVE NUMBERS!
I’m a serious numbers geek and love how much I can read from them when they are tracked properly, accurately, and consistently.
Do I love collecting data and numbers and putting them into a tracker?
Not always, but I don’t need to because my Operations Manager takes care of that for me.
No matter who does it in your business, it’s important that it’s done.
Start with a few numbers you want to track and the frequency, and put them into a sheet that is easily accessible to update.
Here some recommendations on numbers to track depending on your business as always:
- Net profit
- Customer lifetime value (you might need to track tenure for this as well)
- Email list size
- Number of leads
- Number of website visitors
- Cost of acquisition
- Sales conversion rate
- Customer numbers
- Time in implementation
Tracking your numbers on at least a monthly or weekly basis, is essential – especially if you are just starting out.
The more data you have over a period of at least 3-6 months, and ideally 12 or more, the better.
After a period of time and by reviewing your numbers at least monthly, you’ll start seeing some patterns and changes in the numbers.
You’ll also start seeing how they interact and are dependant on each other.
For example, you’ve been running an ad to bring leads to your website but the results aren’t there so your website numbers are down. This could result in fewer sales calls, lower conversion rates, and higher cost of acquisition but even worse, less revenue and net profit.
Or, the ad is bringer fewer but higher quality leads that convert much better, and that increases revenue and profit margin.
Another important thing in your business to track is CASHFLOW.
When you’re getting cash in the door regularly, you should look at tracking that hard-earned money and do some budgeting and forecasting.
I know you’re drifting off again but let’s face it, having money in the bank doesn’t mean it’s all there to spend – and if you don’t look at your payables you’ll end up broke once again.
When looking at your cash inflow and outflow, you’ll be able to identify when you’re running short, when you can make additional investments for your business and when to start building that cash reserve.
This will also help you pay your taxes, super and other payables on time knowing when you need it and actually having it in the bank.
How good would that be?
Keep it simple or ask your bookkeeper to prepare a simple cash flow tracker with at least three months rolling forecast that he or she needs to update weekly so you can stay on top of your money.
Looking at the numbers and how they interact will enable you to make better decisions.
You’re seeing what is actually going on and not just assuming or flying blind.