How is your business doing?
The only way to truly know is to get a good overview of where your finances are currently. Public companies release statements every three months letting the public know how they’re doing.
Likewise, you should periodically check the numbers in your business to see how you’re doing.
How often should you do this?
Ideally, you’ll want to keep a running tally of your most important numbers so they are available at any time at a glance. The less important numbers should be monitored at least once every month or two. When you’re taking stock of your finances, here are some of the most important numbers to understand…
==> Cash Flow
How much money is coming in, and how much money is going out.
Cash flow is the lifeblood of any business. If you have high cash flow, you can hire employees, invest in marketing and spend money to grow your business. If you have low cash flow, you may need to cut back on expenditures for a time until you get it into balance.
Assets, most importantly… cash in the bank, are another crucial element to running a business. Assets can also include items that can be sold or liquidated for cash, including investments. The more assets you have, the safer your business is if it takes a sudden hit. This will ensure that you can survive. The questions is, do you have a safety pad and can you create cash on demand?
If you have low assets, you might want to cut back save some money first instead of spending on growth, or make sure that a portion of you income is set aside for those difficult times. Always be prepared for the unexpected, and only spend what you have.
How much money are you expecting to receive from customers to whom you’ve delivered services but haven’t received payments yet? Knowing this can help you project your cash flow and assets in the near future. It can also help you identify potential problems in your business.
If you have an inordinate amount of outstanding receivables or late deliverables, you might need to look into your follow-up and collection systems. Remember, you are not a bank and you are not in the business of lending. Be smart and prudent where necessary.
==> Examination of Expenses
What you spending your money on? Track your expenses and identify the aspects of your business that are costing the most right now.
Are you spending money to make money or spending money on items that yield little to no return? Are they good investments? Are there expenses that you should cut down on? Examine your expenses regularly to see if you can cut costs and where there are potential issues or waste.
==> Areas of Growth
What areas of your business are growing the fastest? Businesses that focus on their lead area of growth have the highest chance of success. Know where your greatest returns are coming from. Focus on those. Scale them and improve upon them. Testing your markets and your marketing is what management is all about. Find out what your target demographic needs, engage with them, and win!
In business there are going to be fires that need to be put out and problems to be solved. You cannot avoid that. It can come from anywhere. However, you should always be learning and keeping up on trends. Keep one eye on your major opportunities, even as you’re firefighting.
==> Individual Sales Funnel Breakdown
Finally, break down your sales funnel/s and see which pages or offers are the strongest and weakest points.
I cannot understate the importance of this. Too many businesses fail to get the ROI they deserve due to a lack of testing and understanding the weak points of their funnels and split testing to see if they can increase their conversions.
If you don’t have a sales funnel, then that is a whole different issue!
But for example’s sake, let’s say your sales funnel goes like this: people come from the web, then fill out a form and they join your list. Then they receive a free e-book or product, followed by an upsell for a video course, and then an offer to schedule a free consulation which is to convert the person into a coaching program.
In this scenario, which steps are generating the best results, and which ones aren’t?
Perhaps the first upsell of the video course in not doing very well, or the free consultation is not converting. If that is the case you need to understand why, make the ncessary changes, or changhe the funnel.
Or maybe you are missing an opportunity to add another intermediary product or service? For example. jumping from a free e-book or CD to a coaching program in the same funnel might be too much too soon.
Maybe offering a more expensive online video course would be better. Then those who require additional help or acceleration would be more likely to pay for direct coaching? Or maybe you realize that the opt-in is not converting well so it’s time to spend money on more targeted leads?
These days you there is really no excus not to test and track your numbers. There are no exceptions to this rule if you want to be successful online. Period.
Test everything and you will strike gold!
We recommend two solutions for sales funnel creation and management. InstaBuilder 2.0 for a WordPress-based system or Clickfunnels which is a fully-hosted enterprise solution and industy leader. I really cannot recommend anything else, though there is a lot of alternatives out there.
These 5 items above are some of the most important numbers to look at when you’re taking stock of your business and preparing for longevity and growth!