Most business owners seeking improvement are looking for business growth plans and strategies, and all kinds of small business growth advice is available.
It’s important to focus on the product/service that you sell and the market for it.
What’s also vital to understand is the impact of the numbers in your business.
The numbers that guide you to the desired outcome i.e. sustainability, profit, good cash-flow and business value improvement.
If you want to overcome small business growth challenges, you need to know what your targets are, to ensure you achieve improved profit as well as sales growth.
If you want to sell or exit your business, those doing due diligence will want to see numbers to substantiate a price, borrowings etc. They will want to see that business financial controls are in place.
If numbers are so important, the next question is, which numbers?
Numbers are often thought of as typical financial reports, such as Profit and Loss and Balance Sheet. These are ‘results’ based numbers. The numbers that are more interesting and arguably more useful are those that ‘drive’ the results. They are the ones that set the framework for business growth strategies.
Numbers in business relate, not just to financial results, they relate to every aspect of a business as follows:
Product/Service
- Number of products/services sold
- Number of enhancements/upgrades
- Number of products added/deleted
- Number of quotes issued
- Number of jobs in progress
Marketing/Sales
- Number of dollars spent on marketing
- Number of leads/enquiries generated
- Number of prospects in your pipeline
- ROI of marketing spend i.e. how much did each enquiry cost to create
- Number of website visits, social media followers, likes, tweets, re-tweets, blog posts etc.
- Number of leads generated from each marketing tactic e.g. open rate of email marketing messages and engagement with prospect
- Numbers of deals done as a result of enquiries or sales conversion rate
- Sales Growth Percentage
Operations/Finance
- Number of products produced
- Number of productive/unproductive labour hours
- Number of hours spent on rework
- Number of raw materials wasted
- Number of jobs finished on time
- Number of jobs without defects
- Number of jobs finished on budget
- Number of Work in Progress Days
- Number of Inventory Days
- Cost of Goods Percentage
- Overheads Percentage
- Number of Days Customers take to pay
- Number of bad debts
- Number of Days taken to pay Suppliers
Human Resources
- Staff Turnover
- Staff sick days
- Number of staff required to achieve growth
- Number of Contractors required to get work done
- Number of staff training events attended/hours
- Number of Work Health and Safety events
Customer Service
- Number of new customers
- Number of current customers
- Number of customers by class e.g. A,B and C class – focus attention on A’s
- Number of major clients visited
- Number of compliments
- Number of complaints
- Customer retention rate
- Number of referrals from customers
- Number of customer testimonials
Above are just some of the numbers you can use to drive efficiency and improvements in business. They are generally referred to as KPIs (Key Performance Indicators).
The challenge for you is to decide on a maximum of say ten of these (any more becomes too onerous).
Consider if you were away from your business for a while, what would be the ten key things you would want to know to be confident things are on track?
Focus on these numbers helps to drive a business in the right direction and keep things on track.
Most of these numbers can be measured in good business systems. Once they are set up right and targets entered, you can manage by exception i.e. look only at those that fall outside the acceptable criteria.
If you have small business growth and development in mind, you simply cannot have your eye on every single transaction, so you need to find ways to be more efficient and effective in order to reach your goals.
--------------------------------------------------------------
Sue Hirst is a co-founder of CFO On Call
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.