UK +44 (0) 203 397 4970 | US +00 (1) 844 671 2872

Biz-Growth Part 03: Knowing Your Numbers And Why It Is So Important

Around 80% of all businesses fail within the first five years.

This video will teach you:

How to determine the ideal rate of growth for you and your business

What is the true value of your product/service

The importance of knowing your conversion ratios

Help you to understand the average client value over 1, 3 and 5 years

Importance of setting goals in line with business targets

Summary

Around 80% of all businesses fail within the first five years.

You’re about to watch a video that can not only keep you in business and very importantly optimise your sales growth for the next five years. You will hear about many businesses that don’t know their own numbers and how this could be the Achilles Heel and why so many fail.

Business Growth is generally measured in many different ways, from employees or turnover, to profitability or assets. This video will show you how you can make simple changes and set goals to achieve success with your business.

Alex and Rupert talk about a gold standard to work towards when it comes to working out your conversion ratios, from initial enquiry, all the way to an actual meeting with your potential clients.

Transcript:

 

ALEX:                   

Hello, welcome back. As you know, I’m Alex and this is Rupert, Business Growth Bureau. Great video, the last one. We were talking about when people buy from you why. If you didn’t see it, it’s the video just before this one. This is number three now. The point of today’s video is actually to understand – it’s really crucial actually, and this is a great way to sum up the third video – would be to actually know your numbers. Why knowing your numbers is so important, the first thing we are going to kick off with is, what is that? What is knowing your numbers and what does that look like? Is it profit and loss, is it balance sheets, what is it? (0:36)

  

RUPERT:

It sounds incredibly boring but unfortunately it’s a very important topic. I’ve been in scenarios where I’ve been sitting in front of a potential client and then when we’ve looked at their real numbers, what they’re selling their product for or service for and their margins and everything else that goes with it, quite often we’ll end up having a discussion and saying, well actually basically your product mix or your pricing doesn’t look right, and if you were to work using some of the methodology we’ve talked about or are about to talk about, you’re going to find you get a very poor return on that. It’s about flipping it the other way round.

 

ALEX:

We actually went to a seminar yesterday where they were actually talking about how many companies actually get this wrong where they’re saying that they’re either pricing themselves too high and people aren’t buying, or they’re too low and they’re undervaluing their product. And obviously we all know if something’s too low, we perceive it to have little quality to none. So the important thing for the people watching, and people at home, and hopefully you’re enjoying this series so far, is to understand how much value is this worth?

Obviously go out and do market research about that, but how much value is my product or service actually worth? It’s particularly important if you’re a coach or mentor, in that kind of space, especially where you’re providing a service, what is that actually worth to individuals? (1:56)

  

RUPERT:

It’s even more important if you’re what’s classed as a bricks and mortar business, or where you’ve got considerable overheads in running your business, because if you get your pricing strategy wrong and your margins are too low, you could actually just be scaling a problem. So if your business is making a very marginal profit and you scale and grow, you may actually find you run out of cash or move into a loss situation. So it’s very important to understand that crucially, for example, if you were to spend some money on marketing, you’d need to look at your product mix first of all and also try and understand what your process for sale actually is.

For example, it may well be to get one sale you may need to have three meetings on average to get one sale, and maybe prior to that you need to have 10 phone calls, so it’s a ratio of 10:3:1.

 

ALEX:

For the people at home, just to simplify that a little bit more, you really need to understand, how many phone calls do I need to make, how many people do I need to be in front of to actually get the meetings and get to that, and how many people, once I’ve been in front of them, how many people do I need to pitch to, to get one sale.

We speak to a lot of people and they say, I don’t know, I’m maybe making about 10 calls and getting 2 meetings and that usually leads to a sale. But when you drill down on those numbers there’s actually 20 phone calls to maybe one meeting, and out of that one meeting they’re not getting any sales. So what’s really important is for you to sit back and think, okay, when was the last time I did some prospecting, and what kind of results did I have from that?

It would be worth pausing the video or even afterwards making a note, actually taking a minute to sit and think, when was the last time I did some prospecting, how long did it take me to generate one appointment from that? And then, once that appointment came through, of how many appointments I made, did it actually take me to get a sale out of the back end of that?

One of the things that we do and talk to our clients about is, how do I go through a process – and we will get onto this, don’t worry – it’s how do I go through a process where I can almost guarantee the amount of hot leads I’ll be getting out of the back of it? And that’s really crucial, does my process work? And this is something we’ll be touching on a little bit later on, does my process work and what can I do to maybe fix things? (4:08)

  

RUPERT:

That’s so important, what Alex is talking about there. We talked about a ratio of 10:3:1 there, and obviously if you’re making cold calls to get one meeting, maybe your ratio is not 10:3:1.

 

ALEX:

We were with someone yesterday and it was 35 to 2 meetings or something mad like that. (4:28)

  

RUPERT:

That lead to one sale.

 

ALEX:

So obviously, if these numbers relate to you, if 35 calls lead to 2 meetings for yourself and one sale, you really need to make sure that your numbers are high, or you need to change the way you’re bringing your service to market. (4:42)

 

 RUPERT:

That’s exactly right. This is when people tend to be doing the marketing wrong. So, for example, some companies or organisations choose to use telesales. I’m not knocking telesales particularly but it can be a very risky strategy to outsource that, because they are representing your brand and they can kill off opportunities as well as creating new ones, or you can be run ragged on really rubbish appointments.

So, on from that really, your ratios if it’s like 35:3:1 as a case in point probably means you are having to work too hard to get that phone call, and is therefore really important to flip the dynamic around so that people actually asking to have that conversation.

 

ALEX:

Which is funny, because – and I’m not going to go into it too much – the process and how we do certain things internally, which is all backed by our guarantees, that’s how confident we are in it, we get people to the point where out of every hundred people we speak to, a minimum of about 30 people will actually engage with us, which is ridiculously high for the industry.

To go on from that, out of those 30 to 50 people that engage with us, between 15 and 25 are asking for more information, and from the back of that we get people to the point where 8 to 13 are asking for sales based conversations. So it would be really interesting if you found this useful to actually wait until the series comes out where we talk about this process. Those are the kind of numbers that we work to internally. (6:02)

  

RUPERT:

What’s really interesting, if you look further back from those numbers what it will help you to do – and we can help you with this process – is it may be to actually generate those 10 phone calls that it may require a total of possibly 100 people or 150 people actually need to be connected and engaged with.

 

ALEX:

Obviously that’s dependent on industry sector. (6:25) 

 

RUPERT:

It is. Industry sector and the type of people you are trying to reach, so it could be higher or lower than that. We’ll work with you to help you understand those numbers. We’ll also be covering that in some future programmes as well.

 

ALEX:

Let’s just jump back a second here, let’s just say for argument’s sake that someone is watching and they’ve got these numbers bang on – what kind of level of growth should I be looking at? So if we take year one for example, do you think there is a specific percentage of growth that I should be aiming for in year one? What do you think rate of growth should be? Everybody wants 10x, everybody wants to be 100%, 200%, but is there a number, Rupert, do you think, for people watching that they can aim for, this ideal for year one? (7:04)

  

RUPERT:

You’ve raised a very interesting point, because if it was me or Alex, we would want 10x, so 10 times rate of growth. But there is a massive risk with that because if you grow too quickly you can’t keep up with it so that could create massive problems. It could also mean you’re out of cash because you can’t support the sales that are coming through.

 

ALEX:

Let’s drill down – what do you think that ideal growth number would be? (7:29)

 

RUPERT:

This goes on very nicely to the next point around that, in that a large part of those numbers, only you can really answer. One of the scenarios that we tend to find is that you get some companies, or individual directors in those companies, who actually want a 10% to 15% rate of growth, and would be very happy with that. Others want to double it or triple it. Others fear more than about 5%. So, we come across people who fear too little success – obviously, that comes down to return on investment – and equally they fear too much success. So we actually have to flip that question around and ask the client what they want, and what we will put together in place once we understand those numbers, or will recommend what you put in place to build that rate of growth based on the needs of your business.

 

ALEX:

I suppose – and I know you’ll be happy with this as well – what we’d actually be happy to do is, on the link to this video, if you’ve watched this far, we’ll actually leave our scorecard on there, the Business Growth scorecard, because then not only can you understand what we’re talking about but so you can actually start asking these questions.

The scorecard, by the way, what I’m talking about, if you watched the second video where we talked about the scorecard at the end, we’ve created a scorecard where we ask specific questions about your business in terms of the rate of growth, where you are going, the future, your mindset, and around your activity about to achieve certain things out of your business. So we’ll leave the link up there for people to see that.

If you’ve got this far in the video and you’re enjoying the content and you want to see what we’re talking about, I’d really recommend jumping on that scorecard, even if you just use it for your own internal use and asking the questions of yourself, jump on it and start completing that scorecard. (9:12)

  

RUPERT:

I think that’s a very good point, you should go for it.

 

ALEX:

That sums it up quite nicely. So the takeaway from this video would be, Rupert, what would the first thing to take away from this video be? (9:20)

  

RUPERT:

The first thing to take away from this video is about making sure you identify your ideal type of clients who term your rate of growth. Make sure your pricing is right, make sure your costs are right, make sure that what you have is what clients want today and tomorrow, and then put in place the correct engagement process that people have to buy your stuff because there is no other option other than to consider it.

 

ALEX:

That’s also marketing as well. For me, personally, marketing is an amazing thing, especially through social media, and I can’t wait for that series. I don’t know when it’s going to be yet, but that series will be something else. The second thing for people to take away, what would you give it? (9:59)

  

RUPERT:

The bottom line is the Nike tick – Just Do It.

 

ALEX:

And the third thing I suppose would be, complete the scorecard? (10:06)

 

RUPERT:

Yes.

 

ALEX:

From a selfish point of view for a second, the scorecard will really engage with you and it will also give you the tools to think about the questions you should be asking as an individual, whatever the size of your businesses, whether you’re a one-person consultant, whether you have 10 to 15 employees or whether you are, like some of our clients, 250+ employees, that scorecard really could help you answer some key questions you’re struggling to answer in your business. The scorecard link will definitely be on the bottom of this video. Somewhere around there we will put the link for you to fill it out. (10:41)

  

RUPERT:

Also, the really useful thing about the scorecard is when you complete it, you get a copy in your inbox and we get lots of comments from people replying back to us saying, that’s been really useful, we’ve used that as an internal discussion document. And of course then, when we have a conversation with someone, we are able to get to the nub of what they want and what is important to their business, and equally we can make sure that they go down the right path to really drive their business forward.

 

ALEX:

Wonderful. Well, I know I’ve enjoyed this one, this has been a really good chat. I’m sure Rupert has as well, I hope you have, and more importantly, like I’ve always said in the videos, the feedback that you guys give us, the feedback we’ve had before, is the reason we are doing these videos now. Your feedback is our oxygen, you are the reason we are going to be carrying on these videos, so any feedback, any comments, good or bad, put them in the comments below. Give us a tick if you enjoyed and we’ll see you for session four where we’ll be talking about – we don’t know yet, do we? (11:39)

  

RUPERT:

No, we’ve just got that mapped out and working on it right now.

 

ALEX:

Thank you so much. Once again, I’m Alex Smith and this is Rupert Honywood from Business Growth Bureau. Thank you so much, take care of yourself. (11:46)