What do you want for your business in 2020?
If it is growth and an increase in revenue and profit then now is the time to make a commitment, a new year’s resolution even, to look at the 7 key drivers that will guarantee success in your business.
If you haven’t ever asked yourself what drives your business, never fear.
Start taking notes here. There are 7 key drivers;
1. Number of customers:
Knowing exactly how many customers you have at any given time is important because this is the basis for calculating your potential revenue.
2. Average revenue per customer:
This is one of the most important business drivers. How much does a typical customer pay you over the course of a year? Think about how you can increase the average spend from each customer. Should you expand or offer something new that may appeal to your customers? How can you encourage your customers to buy more from you?
3. Number of customers you lose each year:
It’s vital to critically analyse customer loss at the end of each year, financial or calendar. What is your retention rate? (the percentage of customers you retained) Why did you lose customers? Is there a repeat pattern that you’re aware of? Keep current clients happy. It is easier to keep existing clients than it is to attract new ones.
(These first three drivers will help you quantify how much revenue you will receive from existing customers.)
4. Number of leads generated:
Drive more potential clients to your website, phone line and premises. Don’t forget a new lead could change your life. Ensure your customers are clear about what you are offering. Do you have a call to action? Do you need to update your website and collateral? Are you networking and building strong referrals?
5. Sales conversion rate:
Follow up those who’ve made enquiries, show interest and build rapport. Make it easy for prospects to buy from you. Do you have a guarantee? Or a special offer? Remember, Leonardo DiCaprio in The Wolf of Wall Street when he said he could sell anything? How much are you selling and how good are you at the actual selling part? Do you need to make improvements to your sales system?
(These two drivers (leads and conversion) along with your average revenue per customer (at item 2), will help you calculate how much revenue will come from new customers)
6. Gross Profit Margin:
Identify ways to save time and resources in order to make more sales. Drive efficiency and reduce variable costs. A process review may reveal better ways to do things resulting in cost savings through automation or process reengineering.
7. Level of overhead expenses:
Review your business costs to identify fat that can be trimmed (not muscle). It’s critical to identify the core elements of your product or service and ensure you’re not cutting costs in a way that will negatively impact your ability to deliver quality to your clients. Use your cloud accounting to assess where you can make improvements.
(These last 2 drivers will help to show what your potential profit will be)
Every business owner should know exactly where these key drivers are sitting at any point in time. They can then set a plan to improve each one. But which one will make the most impact in your business and produce the best results?
Because of our strength with numbers, we here at Clear Path Accounting can show you which of these levers will have the maximum impact on your business.
If you’re interested, book a time with one of our accountants and we can go through our Growth Equation with you. This session will show you which drivers will result in the most improvement in your business.
A wise man, my business coach (yes I have one too), once told me that the results you have right now, in all areas of your life, are a true reflection of your commitment.
Make the commitment right now, to improve your business drivers, then watch the improvement on your revenue and your profit!