You've Got To Measure It, to Manage It!

Article written for Sign Update Magazine

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. 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, we'll 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behind in their financial reporting, relying on outdated data to make critical decisions.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.