(Photo by Dave Bleasdale)
Ultimately your business is about numbers: income, costs, profit, sales, and referrals. But what numbers should you focus on based on your company’s goals?
If you’re just starting your business, you’re trying to unlock the magic formula for attracting clients. You’re not quite sure how much to charge or how much time you’re spending on your various business tasks. All you know is you need more sales. So you try different marketing messages, advertising to different niches, update your website, etc. You do more of what’s working and eliminate things that don’t. It’s a real-world experiment, and you’re keeping track of your bank balance (since you’re likely spending more than you’re earning).
As you grow your business, you’re optimizing your systems. You’re measuring the true cost of your product/services, your profit margin, and your return on your investment/time (for each business activity, including face-to-face meetings, networking events, etc.). By knowing the lifetime value of a new customer, you’ll be able to know how much you should bid for pay-per-click ads or pay for additional traffic.
If you’re seeking investors in your business or are interested in selling your business, others will care about: cost per customer acquisition, profit per sale, and annual sales. These numbers will provide them the financial bottom-line information necessary to decide the investment risk and likelihood of return.
Even if you’re not a “numbers person”, as a business owner you need to keep focused on your key indicators. You’re in business to make money. By focusing on these numbers you’ll be ensuring your long-term viability.