6 Feedback Loops You Need to Create In Your Business
As a Business Coach I see this mistake time and time again – If you are using the money in your bank account as the only measure of success… you’re letting yourself down hard.
Money is the LAST place success shows up.
In fact, your bank balance is a lagging indicator to the success of a strategy (meaning it happens AFTER that success has been had).
How will you know if something is working if your only way of measuring that success is something that happens AFTER you achieve something?
How will you measure progress?
Listen, I know you might HATE numbers.
So many creatives do.
But as a business owner you HAVE to know your numbers. If you don’t you absolutely will not achieve your highest potential.
Can I repeat that? You will NOT ACHIEVE YOUR POTENTIAL if you don’t get on board with learning some numbers.
Now you can outsource your accounting and the other lagging indicator stuff – what’s in your account is not a clear indicator of where you’re going anyway so if you hate numbers hand all of that off and get a weekly report on where you’re at. Simple.
But let’s talk about some numbers you NEED to be on top of:
1. Your advertising metrics. Do you know the Cost-Per-Click and Cost-Per-Conversion numbers you need to hit in order to breakeven and be profitable with your campaigns?
2. Number of leads needed and acquired each month to hit your income goals.
3. Your conversion rates on EVERYTHING – what’s your conversion rate to sign up on your optin landing page? What’s your sales conversion rate when you have a conversation with someone? What’s your conversion rate on in-person visits?
4. Your monthly expenses and cash flow projections. Yes… this is money stuff but in order to plan ahead you’ll need to see into the future!
5. Your average daily work value – how much are you paying yourself in terms of the work you do? What’s the opportunity cost of this? Could you hire someone to do the work you did today for $10 an hour to open you up to activities that could generate $100 an hour? $500 an hour?
6. Your average customer value. Do you know how much a customer is worth? Not just the purchase they made today, but what they are likely to spend over the life of your relationship. This isn’t something you’ll know until you get a few clients under your belt, but even new business owners can and should place goals around this.
There are so many things you can measure and depending on your business others may be important as well.