Marketing Advice
You’ve got to measure it, to manage it
Let’s face it, running a business is tough and in a competitive signage industry, understanding and managing your business numbers is not just important – it's crucial. Colin Sinclair McDermott aka The Online Print Coach outlines how you’ve got to measure it, to manage it.
A
s a business coach with years of experience in the print and signage sectors,
I've seen fi rsthand how a lack of fi nancial savvy can cripple even the most passionate and skilled business owners.
In this article, I explore the importance of staying on top of your numbers and provide actionable insights to help you take control of your fi nancial health.
The risks of ignoring your numbers
Failing to stay on top of your fi nancials can lead to many problems. One of the most common issues is cash fl ow mismanagement. When you don't have a clear picture of your income and expenses, you risk not being able to pay suppliers or employees on time, which can disrupt your supply chain and overall business operations. Additionally, poor budgeting can lead to overspending in some areas and underspending in others, further destabilising your business. As the adage goes, ‘If you don't measure it, you can't manage it’. Without timely and accurate fi nancial data, making informed business decisions is nearly impossible. This can lead to stress, sleepless nights, and a common feeling of being out of control.
Implementing real-time financial reporting
To avoid these pitfalls, businesses like yours should prioritise real-time fi nancial reporting.
Astonishingly, many companies I come across are months or even years behind in their fi nancial reporting, relying on outdated data to make critical decisions. Implementing systems for real-time fi nancial reporting is essential. This can be achieved through modern accounting software or by hiring a dedicated
www.signupdate.co.uk
bookkeeper who can keep your fi nancials up-to-date.
Outsourcing your fi nancial management if you lack the time or expertise as I did when I ran my own printing company is a viable option. This ensures that you always have accurate and current fi nancial information at your fi ngertips, enabling you to make better decisions and maintain control over your business.
Essential metrics for sales and marketing
Understanding your sales and marketing data is just as important as managing your fi nancials. Here are some key metrics you should be tracking:
• Lead generation: How many enquiries are you receiving each month? Tracking the number of leads helps you understand the effectiveness of your marketing efforts.
• Conversion rate: Of the leads generated, how many are converting into customers? This metric helps you gauge the effi ciency of your sales process.
• Customer retention: How many customers have ordered from you in the past year, and how frequently are they reordering? Loyal customers are invaluable, and understanding their behaviour can help you improve retention strategies.
• Average sales value: What is the average value of each sale? Knowing this can help you set realistic sales targets and identify opportunities for upselling.
By regularly monitoring these metrics, you can make informed decisions to optimise your sales and marketing strategies. For instance, increasing your lead generation by just 10% or improving
your conversion rate by a few percentage points can signifi cantly boost your revenue.
The power of incremental improvements
Small, incremental changes can have a substantial impact on your bottom line. Let's consider a scenario: a small signage business generating 120 leads per year with a 40% conversion rate. By increasing lead generation to 132 leads, just a 10% increase, and improving the conversion rate to 44%, again 10%, the business can see a signifi cant increase in revenue. Additionally, enhancing customer retention and average sales value can further boost your profi tability. For example, if customers currently order 2.5 times per year on average, increasing this to 2.75 times and raising the average order value by 10% can substantially improve your gross margin. In one case study, such incremental improvements led to an increase in gross margin by over £16,000 annually and that was a relatively small signage business turning over in the region of £120,000 per annum.
Overcoming common barriers Many business owners struggle to keep on top of their numbers due to time constraints or a lack of fi nancial expertise. However, these challenges can be overcome. Automating fi nancial processes, delegating tasks, and investing in proper training and resources can free up time and ensure your fi nancials are managed effectively. It's also crucial to confront any fears about what the numbers might reveal. Avoiding fi nancial analysis due to fear of negative outcomes only makes matters worse. Embracing transparency and being proactive in addressing fi nancial issues is the key to running a predictable and profi table signage business.
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