While bringing in new customers, developing marketing strategies and managing accounts are all sound and necessary practices for a small business, they do not, in themselves, ensure the overall health of your business.
Monitoring progress throughout your business is like attaching a pace-maker. It aims to provide a steady and rhythmic pace for the business to follow in order to prevent flat-lining.
The first two areas that should constantly be monitored are cash flow and incoming sales leads. Without either of these, your business is on the fast track to failure. Improper cash flow management is the #1 killer of small businesses - and we don't want you to become a statistic!
Keep track of money going in and out, as it is happening. A cash flow forecast is the best way to consistently reduce the chances of something going wrong.
Sales leads need to be managed. Every business manager needs to know how many leads their marketing activities are attracting, how many are converting into prospects (this gives you an idea if your marketing is attracting the attention of the right type of customer) and how many of those prospects are being converted into customers.
Another important piece of the puzzle is measuring the extent to which you hold on to the customers you have worked so hard to acquire. We refer to this metric as your customer retention rate.
Focusing on generating sales leads without having a strategy in place to increase the amount of time those customers stay with you is a bit like running a bath without first putting the plug-in!
Knowing all of these essential numbers can provide you with information on which part of your marketing and selling processes are working and, even more importantly, which ones aren't. That allows you to focus on the areas that are more likely to improve your Return on Investment.
Assign and assess key performance indicators (or KPI's) which are necessary to achieve your most important objectives. Don't introduce KPI's just for the sake of having them. As in the dashboard of a car, the fewer the better and the more impact they will have in helping you reach your destination the more prominence they should have.
Implement monthly meetings dedicated to analysing these KPI's so that swift action can be taken to correct any part of your business that isn't performing as it should.
Monitoring the overall health and success of your business can also be improved by benchmarking. Knowing the numbers and, more specifically, the ratios being achieved by comparable top performers can highlight areas in your business which can be improved.
We have found this is a great way of achieving your goals in the most efficient manner.