Do you make business planning decisions based on the factual data within your business numbers?
Many people in business bury their heads in the sand when it comes to numbers. But numbers can provide super powerful objective insights into what’s really happening in the business.
Our business numbers give us concrete data on past performance, our current situation and potential future trends. When we analyse these numbers we can make informed decisions rather than relying on our feelings, or what someone else is whispering in our ear.
Let me give you an example.
I worked with a business coaching client to develop the plan for his business for the year ahead. (We’ll call him Bill.)
Bill told me that sales were drying up and he’d heard a competitor complaining there was no business to be had. A recession was coming he was convinced.
Bill was afraid to take anyone else on for fear of having an additional wage to pay. Although his workforce was working flat out, he thought he’d wait for more sales to come in before he’d think about recruitment.
Bill realised (I helped him 😊) that he was letting his fear hold his business growth back and coming up with all sorts of reasons to stay where he was, none of which were based on hard data.
We got the numbers and did the analysis.
Sales pipeline
The figures actually showed he had a healthy sales pipeline with work that would take his team, at its existing size, well into the year to complete.
Customer analysis
All his leads were either returning customers or had heard about his business through word-of-mouth. His business spent no money marketing for new business.
Bill realised that this meant that if he did need more sales, there was a vast pool of untapped potential customers the business could market to.
Cashflow
When we created a cashflow forecast, the numbers reassured Bill that he could afford to hire a new recruit, invest in a new van AND invest in additional systems to automate processes.
This meant the business would be more productive and efficient and would allow customer jobs to be delivered more quickly, work to be invoiced sooner and the business would be able to handle more sales.
Profit margins
We ran the numbers on the different products and services the business offers and were able to identify the most profitable. These were what the business would plan to focus on in the next quarter.
The demand for these services, identified from the sales pipeline, also gave Bill the confidence to raise his prices by 10%, increasing his margins further.
Of course, your numbers could be very different.
There are multiple scenarios with a whole range of business numbers to analyse and make decisions on before putting together your business plan.
A sluggish sales pipeline with few leads coming through could indicate the need for a marketing plan as part of the business plan.
Low customer retention could mean the need for training on improving customer service.
A low conversion rate could indicate the need for sales training or putting a guarantee in place.
Low productivity and missed KPIs could indicate a need for improved systems or staff training.
There are countless aspects of a business where numbers can be captured and analysed to identify areas to focus on for business growth. It’s unlikely you’ll be able to work on everything at once. Prioritise those that will have the maximum impact and work on just one or two at a time.
Focusing on numbers and using them in the business planning process, can help us put things in true perspective and make more informed decisions that will help guide our growth. I’ve found it can be a real eye-opener for business owners and their teams.
Want some help getting to grip with your numbers? Feel free to get in touch!
