Why should you know your business numbers?
530 million. That’s the number of people who will travel on a particular escalator at Waterloo Station over that escalator’s lifetime. I know that because of a poster on the station wall telling me so. I also know there are 413 escalators on the London Underground Network – another poster. So it seems that London Underground know their numbers. One of the reasons that LUL need to know their numbers is because they need to predict the numbers of passengers each day on each line. This helps them work out how many trains they need and how many staff etc. It also helps them work out if they’re going to make a profit or not, and the top management of LUL will be reporting back to the Mayor’s office on a regular basis, particularly about profit.
So how about you? Maybe you love numbers; maybe you hate them; maybe you think they’re not important or don’t understand them. I don’t know how you are with numbers. But I do know that at some level your business, like mine, will be about the numbers. The numbers will be a measure of your business, and if you know how to use them they can help you run it more successfully.
For example, how many customers do you have? How many would you like? What have they spent with you this year? Is that more or less than last year? How many prospects on your database? How many meetings have you had in the last month? How many would you like to have? How many proposals have you written? How many sales have you made this year so far? And so on. And I haven’t begun to speak about the financial numbers – your turnover, average order value, cash flow etc. Why is this important? Because these numbers will tell you how successful your business is and what you need to do to make it more successful; or maybe, for it not to go under.
And if we turn to marketing for a moment, Nigel Temple, the small business marketing guru, tells me that if I do any marketing activity, like tweeting, blogging, mailing, running seminars etc, I need to measure the results. Otherwise how do I know if anything’s working? And how will I know what I need to do more of, and what to do less of. That seems like good advice. Not always easy but creating success never was always easy.
Maybe you’re very good with all this stuff. If so, well done. If not, talk to Nigel about measuring the success of your business. See you at the next Boardroom meeting!
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Hi Walter
Thank you for posting this. During my marketing degree, I remember one of the lecturers asking whether we liked mathematics. There were groans from several of the students. “Well,” he said, “you had better sharpen up your pencils, as the best marketers are good with numbers.”
A friend of mine is a director in a large consumer goods company. He has the ability to see spreadsheets as three dimensional shapes. He can read through a sales report, which contains reams of data and highlight key issues within the numbers.
From a small business perspective, the numbers include projected turnover and profitability, the number of customers required to meet these objectives, promotional mix size, outputs (i.e. a weekly blog, a monthly article, X phone calls per day, Y emails etc) and inputs i.e. the number of sales enquiries and subsequent conversion rates.
It’s surprising how sales and marketing activities can be boiled down to a set of key numbers and thank you for reminding us of this.
I would urge all our members to be more aware of sales and marketing numbers. Set targets. Track results. Modify your behaviour according.
All the best
Nigel