We know small business administration sounds like a total snooze! But this is perhaps one of my favorite parts about working with our clients. After all, it’s all about the numbers! Numbers don’t lie. Number just are. Logos, funnels, Facebook covers, all of those guys are so subjective to you, to your designer, to your best friend. But not the old, plain, simpleton numbers that you will track and love as you become really proficient in your small business administration.
No matter what color or font, numbers will tell it to you like it is – straightforward, cold, and intentionally. That’s why a successful small business administration strategy should be atop of your to-do list.
True story – you can have a horrible website, and you can have a horrible brand, and you can still make lots and lots of money! However, you can also have a great, amazing website, a great amazing brand, a pristine ideal client, and, poof, no profit at all. Sadly, the second statement is pretty awful. And, even more sadly, I’ve seen it happening time and time again. If you lack in the small business administration department, you will also lack in revenue.
The thing is, anyone, or mostly anyone, can put together a great logo, and a super cool website with an animated navigation menu on the top. It’s called hiring a great designer. Or, the more affordable option? Canva.
But, let’s review.
Imagine you’re lured into a little corner, brick and mortar shop through this pretty irresistible smell of freshly baked, chocolate chip cookies. Maybe, you were on your way to your car, or just walking by in general, hurried, going to the pharmacy. But that smell. Boy. That smell really caught your attention. So you do turn around. You do walk into the little shop in the corner, which is super cute. You are happily surprised. It reminds you of Disney World. And your grandmother’s kitchen. The place is clean, spotless. The woman behind the counter is all smiles. She welcomes you in. And she smiles. All she does, actually, is smile. So you take a better look around. And there, you realize it, there are no cookies. The shelves are empty. The displays clean. You are confused. You came in for cookies! Right? You walked in because your nose told you there would be cookies. You were greeted by a sales attendant who was super nice and pretended, yes, that she was going to sell you the most amazing and incredible chocolate chip cookies. And you were, in fact, ready to buy a dozen cookies. Or maybe two, or three dozen. Or more! But they had none!
I’m telling you this for a reason – this is exactly how your customers feel when you fail to build your business from the ground up, when you have not paid enough attention to the back-end or the way you are going to work through your small business administration.
As an entrepreneur, there are two very simple but important questions you should be asking yourself in regards to your business: What exactly are you selling? And, more importantly, how are you planning to make money with it?
A great brand and a great site without a great business foundation are the equivalent of a great smelling cookie shop with no cookies – you are all dressed up, but really, you have nowhere to go.
The most important thing we are going to today do is to look at your numbers, then! That’s just the first step into being really successful at your small business administration. And that, in turn, will get you a little bit closer to successfully, and efficiently, building your business.
Wouldn’t you like to know how much money you will make this month? In the next three months? Maybe in twelve months? Wouldn’t that give you piece of mind and a great sense of how much you can actually spend, say, in hiring additional resources or investing in additional tools? There’s no app for it (unfortunately), but a great, simple, black and white spreadsheet can easily work for you. And that’s really all it takes to get better at your small business administration!
If you are selling product, for example, you will have to beware of inventory issues. What’s your max? What’s your minimum? What does your pipeline look like? How are you tracking best performers and poor performers? How many units do you need to sell a week to pay the bills?
If you are in the business of selling services, how do you charge? Do you do hourly rates or retainer rates? Do you charge per project or per month? All those are great questions to start jotting down right now as you are getting more serious about your small business administration!
The reason this is so important is that you want to be able to have clear goals, that are also realistic and attainable. We are also looking for goals that can be trackable. And, finally, I urge to focus on goals that allow you to continue to grow every month, no matter how slowly.
KNOW YOUR NUMBERS
Everyone seems to be pretty obsessed about a six-figure year, or a $10,000 a month income report. Somehow, these two benchmark have become the gold standard in the digital world when it’s time to declare success. You fought. You conquered.
Yay to you!
Unfortunately, $100,000 or $10,000 are not the most useful numbers to you right now.
It is all a relative game. And this relative game is played from the corner of your small business administration bench!
If you are making $1,500 right now via adverting in your blog, hitting $10,000 is pretty steep. If you are already bringing $20,000 in commissions renting condos in Costa Rica (good for you!), then $10,000 sounds like a step back. You have to know your numbers. Not someone else’s.
Alright. So let’s start again.
If you have been in business for a while, what is your average growth month to month? Have you become stagnant and you don’t know why? (Maybe that was the reason you picked up this book?). Look at prior months, or years. Were week-to-week increases looking better? By how much? Often, the market changes, or a new competitor enters and we do not take the right action, or we sit on it, because there’s always tomorrow. This is a good time to take a deeper look at your revenue and profitability trends, and assess whether or not you are succeeding or you might need a little bit of help. When you are doing that, think about also leads that are coming in or your lead generation machine. What is the ratio of leads versus revenue? Is it taking you more leads than months prior to bring in the same revenue? Or fewer leads?
If your revenue is growing, and your ratio revenue to leads is the same, that means you are bringing in more leads, and those leads are performing great. By all means, keep doing what you are doing. Hey, maybe you’re already a pro at your small business administration. Good for you!
On the other hand, if you revenue is decreasing even though your marketing is attracting the same number of leads, your ratio of leads to revenue has decreased. Maybe it’s time you tweak your offer? Or look again at the competition? Or try to figure out why more leads are walking away? In this case, the problem is not marketing (leads are coming), but product and offering.
Another scenario could be that even though the ratio lead to revenue is the same, you are attracting fewer leads than before. Then, as you have imagined, your marketing needs further tweaking and reviewing.
You can see from this short exercise that something can easily go wrong, and across multiple pieces stages of your sales funnel. Imagine if you went ahead and spent all this money against digital marketing, to attract more leads because you saw your revenue decreasing, but it was in fact your conversion ratio the one not working out? You would have wasted hundredths and thousands of dollars.
Knowing your numbers will also allow you to establish better goals. Are you growing 5% every month? What can you do next to grow by 10%, then? Please note that, in most cases, the solution might not be to spend more in advertising and marketing. Instead, think about adding a referral system or opt-in, upselling additional services on the confirmation or Thank You page, etc. Your best case scenario is that your leads are steady, your lead to revenue ratio is steady, and all you have to do is add one small other product at the end of the check out queue!
Are you now getting more excited about small business administration? Please continue on reading.
Regardless of whether you are offering services or products, you should have a great system in place to track what sells more and most often. (If you don’t, get one right now. Seriously. Right this minute.) If you are an interior designer, do you find yourself closing more residential or commercial projects? And how much each project on average, commercial or residential, do they contribute to your total revenue? If you are a personal trainer, and you offer group bootcamp classes and private sessions, how many of each do you do every month, and what’s the revenue % of group versus private sessions? You might love to do bootcamp classes, but maybe that’s only 10% of your total revenue, and it happens to be that you spend too much time organizing them, finding the right place, booking at least five clients, etc. You should focus on what brings you the most revenue for the least amount of effort. Remember the 80/20 rule? It applies here too. 80% of your revenue will come from 20% of your clients. Wouldn’t you want to know who those amazing and beautiful clients are (and what else they might want to buy from you)?
Decluttering (or “optimizing”) is also a great exercise to do on your website. If you have seven options in your navigation menu but everyone scrolls down to the bottom to find your “About Us” page, you should move the About Us page to the top and delete one of the options people don’t care enough about. You can see how people interact with your site on Google Analytics (it’s a lot of fun, and also a little bit frustrating).
If you are an Etsy seller and you find out 80% of your sales are earrings and only 20% are necklaces… guess what? Bring in more earrings and get rid of all the necklaces. A few months from now, this kind of decluttering will significantly help your business (and your sanity, too).
In short, do more of what works, and do less of what doesn’t.
As with branding, consistency creates trust – both for your business and for your own self, too. Would you buy your organic, gluten-free salad from the deli that has been selling the organic, gluten-free salad for the last two years, or from the other place, which also offers an organic, gluten-free salad, but has also been trying to sell pizza, sandwiches and baked goods, too? As a consumer yourself, you are already looking for stability in the products and services you choose to purchase. I bet you will find it a little bit tougher to trust (and give your money to) someone who keeps rebranding himself in an effort to find his niche, or his true calling. You’ve heard it before – jack of all trades but master of none.
Consistency in branding and business practices, conversely, play an important part in establishing you as a trusted source in your field or category, too.Often, we might try something, and it might not work, and we will be tempted to scratch it out, and start again. Immediately, negative thoughts arrive… “I was so wrong about giving a webinar.” Or, “I’m done being a ___, obviously I’m not good at it.” I know it could be heartbreaking to see your numbers if they are not that great in the first part of this chapter, but, you can’t fix what you don’t know it’s broken. And, the time and effort you put in actually rewards you later! If you are constantly starting over, you are always going to be the new kid on the block. You are always going to be faced with the steepest of learning curves, because you are always going to be back at the beginning. Once you do make it to the finish line, of your new product or service offering, you can at least look back and recognize you have learned the process. Next time? You’ll be able to do it better than before, or at least better than the next person coming in… because now you have feedback on how your audience responded… which is pretty huge!
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