You’ve got to measure it, to manage it

Oct 10, 2024 | Industry Advice

shutterstock 1228979197 You’ve got to measure it, to manage itLet’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.

As a business coach with years of experience in the print and signage sectors, I’ve seen firsthand how a lack of financial 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 financial health.

The risks of ignoring your numbers

Failing to stay on top of your financials can lead to many problems. One of the most common issues is cash flow 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 financial 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 financial reporting.

Astonishingly, many companies I come across are months or even years behind in their financial reporting, relying on outdated data to make critical decisions. Implementing systems for real-time financial reporting is essential. This can be achieved through modern accounting software or by hiring a dedicated bookkeeper who can keep your financials up-to-date.

Outsourcing your financial 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 financial information at your fingertips, 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 financials. 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 efficiency 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 significantly 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 significant increase in revenue. Additionally, enhancing customer retention and average sales value can further boost your profitability.

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 financial expertise. However, these challenges can be overcome. Automating financial processes, delegating tasks, and investing in proper training and resources can free up time and ensure your financials are managed effectively.

It’s also crucial to confront any fears about what the numbers might reveal. Avoiding financial analysis due to fear of negative outcomes only makes matters worse. Embracing transparency and being proactive in addressing financial issues is the key to running a predictable and profitable signage business.

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