Business Startup Basics #3:  Work the Numbers!
11 0

Posted by  in Business Fundamentals

Author: Darlene Hull

This strategy will help you create and predict your bottom line.

What’s your conversion rate? If you talk to 10 people, how many of them are likely to sign on? What does a client cost you in time and materials both in the prospecting, the product, and in the execution of your services? What does it cost you in time to land and look after a client. You NEED these numbers!

Here’s how:

  • Get a white board, flip chart, notebook, or an app (use something you have on hand!): Then, over the next 30 days, every time you talk to someone about your business, write it down. Every time they sign on, cross them off.
  • If you spent money to go see them, write that down. If you spent money to set them up, write that down.
  • How many hours did it take to talk to that many people? What’s your hourly rate? Write it down.

Once you have your numbers you can calculate how much you REALLY earn per client, how many clients you need to make the living you’re after, and how many people you need to talk to to get that many to sign on.

At the end of thirty days you’ll know your initial stats, and you can get to work.

For example? (and I’m going to use simple numbers here just to give you an idea – I’m not a math whiz!)

  • You want to clear $5000/month in your business.
  • It costs you $200 to land a client, and you charge $300 for the sign on. It costs you monthly $50 to maintain the client, and you charge $100.
  • If you do the math you’ll see that you need 100 clients to maintain your $5000/month desired income.
  • Your conversion rate is 1/10 because you don’t have the skills yet from Colleen and Alice’s workshops…
  • to land 100 clients you need to talk to 1000 people. How soon do you want to get there? Let’s say 5 months. This means you need to talk to 200 people per month.
  • On your expenses sheet you need to write down all the costs of your business plus the cost of acquiring 20 clients each month.
  • On the income sheet you need to write down all the money you’ll make from signing on 20 new clients, plus the money you’ll make maintaining them month after month.
  • On the “Key Indicators” sheet you need to list your activities. So, perhaps a Networking event you go to counts for say, 10 people to talk to face to face each month. What else will you do?
    • Cold calls? How many?
    • Other networking events? Which ones, how many?
    • Going door to door? How many doors, how often? Etc.

When you have your numbers and your goals, you then always work one “hard” quarter and one “soft” quarter. In other words, you stick to your guns for this quarter, regardless, unless it’s truly going to bankrupt you. As you see what’s working and what’s not working, you adjust your “soft” quarter. When you’re in your soft quarter, it becomes your hard quarter, and the next one is soft. See what I mean?

What tricks and secrets do you have for working your numbers?  Are there tools or apps you like to use?  Any lessons you can share?  We’d love to have you share them below!

Darlene

(PS, my sincere thanks to Melanie Hayden-Sparks and Suzanne Evans for their teaching and help with this information!)

Be A Star!Post your comments below and join in the conversation (or get it started!) and then share this post with your friends using the different share buttons on the blog.

I’d sure appreciate it! Thanks!


Related Posts with Thumbnails
Share