3 Data Points You Must Track Immediately to Monitor Your Business’s Health LISTEN TO THE NUMBERS
In business, numbers speak louder than anything else. Data provides an analysis of the health of a company. It can be one of the most important factors in decision-making for many entrepreneurs and one of the greatest indicators of growth. For these reasons and many others, you cannot ignore your numbers. If you’re not sure where to start, consider these three top data points to track the health and growth of your business. Churn: New customers provide an opportunity for a new revenue stream, but the startup costs and the timeline to turn a profit should make gathering new customers a second priority. Instead, it’s your regulars who can influence your regular cash flow, and when you’re having to fill gaps left by previous customers, you’re steering a sinking ship. By calculating churn, you can identify how much money is walking out the door each month and year. Once you know how much you’re losing, you can effectively establish a plan to keep your regulars and stop your revenue from leaking. Pipeline Revenue: This is how much money you would acquire if you landed every single sale. So, let’s say your
pipeline revenue for a single month is $100,000. You might actually only acquire $30,000, but you can use the pipeline revenue number to set goals for your sales team and track progress. If pipeline revenue is low, then your true revenue suffers. Annual Average Employee Revenue: You can track data to ensure your greatest resource — your employees — is valuable. This data point is what you get when you average your regular revenue among all your employees. For every employee, you should be making at least $100,000 in revenue. If your average is below $100,000, this may be
a sign of overstaffing or inadequate use of your resources.
The Numbers Combined: If you take these numbers at face value, then you’re not optimizing the usefulness they provide through tracking. For example, if your churn rate on a new product is low after one month of implementation, that data is skewed. You need more time to add more data on churn, satisfaction, and effectiveness before claiming this product is a success. If anything, that low churn rate tells you the implementation of the product was positive. The key is to keep that momentum going to maintain a low churn rate. Your industry can also influence the numbers you need to analyze. For example, if monitoring the annual average of employee revenue doesn’t make sense for your industry, don’t include it in your top three. Instead, find a metric that does work for your industry. The thing you cannot do is ignore the data. That’s a formula for disaster. The numbers tell a big part of the story when we contextualize them. With that information, business leaders can make informed decisions to push their companies forward.
2 | (410) 832-0000 | jwyatt@harrisonlawgroup.com
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