Article #28, November 30, 2004
Don’t Let Numbers Intimidate You!
This time of year, it is more important than ever to fully understand all aspects of your business. Many of my clients are intimidated by analysis, but it can be very simple. Start small.
You may do these analyses on paper or using a spreadsheet software, like Excel.
First, add up your total revenues (aka gross sales) by month for at least one year. Put them side by side and look at them. Is there any seasonality? Do you notice any trends? You have just done your first analysis.
Now, add your quarterly sales; put these numbers side by side and look at them. What do you notice about them? Are your revenues growing? At what percentage increase? Why do you think the changes are taking place?
To analyze deeper, go through your calendar and note what marketing activities you were executing throughout the year, and see what impact they had on your sales. If you ran an ad for the first 6 months of the year, did it affect your revenues?
It’s also important to perform a post analysis for each of your marketing efforts. For example, if you joined a networking group, has it paid off? To find out, combine the annual membership fee with the cost of each event you attended. Add all sales obtained through this group, including referrals, and compare the revenues to the costs. What is your Return On Investment or ROI for this expenditure?
If you have attended networking events regularly for awhile and have perfected your networking technique, you should be making money. If you are not, perhaps this group’s membership does not include your target market. You may want to cut your losses and try a different group. In addition, if you are spending a great deal of time developing business from this group, you should take this time investment into account when making decisions regarding ROI.
Some of your marketing strategies and techniques will be more difficult to track. Take this newsletter as an example. I spend a small amount of money and time creating and sending this newsletter. I believe in this vehicle as a way to keep in touch with my current and past clients, as well as potential clients and referral sources.
My phone does not ring off the hook directly because of this email, but I do remind people of my existence monthly. For individuals who might be interested in hiring me, but they’re not yet ready, I remind them regularly that I’m still here. Possible referral sources are more likely to think of me when they encounter someone who needs a coach - because I am there. So, ROI is not always directly quantitative.
One final way to analyze your business is to keep asking your customers and prospects. Why do they buy from you? Why don’t they buy from you?
I strongly recommend monthly strategy sessions to determine what’s working and not working and why. Look at your revenues. Compare them to your investments to attain the ROI for every marketing strategy you employ. Examine your business plan carefully to make sure your efforts are aligned with your goals. If they are not, change your efforts or change your goals. Finally, create an action plan for the next month to stay focused and continue with what’s working.
Doing these simple analyses on a regular basis will give you confidence in your business ability. Let me know if you need any help!