Do you know how well your business is performing?
Can you tell exactly how much work you will have in the next few weeks or months and what is a realistic income from it?
There are so many things to worry about when you run a business. From sales, production, support to client relations and many more. Most of them can occupy your mind all the time. And no doubt you are responsible for them yourself, making you super busy and also making tracking your business performance quite difficult.
Managing your business performance is one of the most crucial aspects of your work. Only once you know the figures you can foretell what the future may hold for you and make serious decisions regarding your business.
You can react to any potential dangers before they happen, predict slower times and make sure that you have enough work to go through them intact. You can plan the best time to take a break and when you should work on the business with the full force.
In short, this knowledge allows you to steer your company so that it always prospers, which is, I am sure, exactly what you want for it.
How to track and manage your business performance
The good news is that it’s extremely easy to know exactly what is going on with your company. In order to make that happen, all you need to do is track 3 aspects of your business performance:
Quotes
Firstly, you should track how much value is in your sales pipeline, how many jobs you may have potentially coming in and what is a realistic income from them. Of course, you can’t predict exact figures. You don’t know which of those proposals will convert into projects, however with my system you can estimate the realistic worth of your sales and be able to tell whether you have enough work in your pipeline.
Action: To find out exactly how much value is in your quotes you need to specify the probability to each estimate you submitted (in %) and work out a realistic income based on it.
For instance, if you submitted a quote worth $100 to a new prospect and there are 3 other companies pitching for the job, the probability of winning the project is 25%. Your realistic income from it then is $25 (25% of the value of the quote). If the same job was submitted to a company that does a lot of business with you the probability may have been much higher and thus your realistic income would be bigger too.
What do you need this for: To be able to tell if you have enough sales to keep your company going for the next few weeks.
Active Projects
Tracking active projects allows you to tell how much money is currently in your production, what has already been paid, how much is still outstanding and when you could expect to get the money.
Action: To know how much money is in your production list you need to keep track of:
the value of a project, amount paid upfront (if any), remaining sum to be paid,
deadline (to help you estimate when the remaining sum will be paid)status of the project (to tell how close you might be to getting those money).
What do you need this for: To track how much money is in active projects. Knowing this allows you to track your financial situation and may indicate if you are running into any cash-flow problems.
Lost Sales
The last thing you need to track are sales that never turned into a project. It is good to know how much potential income you didn’t win and what was the reason for losing it. Often you can increase your sales based on this information alone.
Let’s say that you noticed that many sales were lost due to availability issues. You could take action to allow projects to start quicker. You could hire freelancers to help you with your work load or improve the systems by which your company is working and thus stand a chance of winning more projects in the future.
Action: Keep a list of all rejected quotes, values and reasons why you didn’t get the work.
What do you need this for: To improve your sales. Knowing the reasons why you lose sales allows you to take action to eliminate some of them and win similar projects in the future.
FREE BUSINESS PERFORMANCE MANAGEMENT SPREADSHEET
I realize that even though this business performance tracking system is quite simple, getting started with it may still be problematic. Therefore I created a spreadsheet for you with the system worked out.
It’s ready to use straight away so, download a copy and start tracking your business performance straight away.
LEARN HOW TO MANAGE YOUR BUSINESS PERFORMANCE
About Pawel Grabowski
