12 months & 20 business plans later: How this simple activity separates the strong from the weak

What we learnt about small business from spending 12 months writing 20 business plans.  The key to keeping your business, in business, could be as simple as tracking three or four key numbers every single day.

Owning your financials

Maybe eight years ago, while I was in between selling out of one business and starting up WORK[etc], I spent a year writing business plans for other businesses. It was part of a pseudo-government initiative where a small business could hire a consultant to work with them to produce a business plan and then claim 50% of the cost back as a grant.

Over the course of that year I got heavily involved with maybe 20 businesses covering the full range of industries — from a bio-tech team working out of a local university who was looking to commercialize sleep monitoring technology, all the way through to a 30-year-old, family-run mechanical engineering company struggling to stay competitive against cheaper off-shore producers.

I worked with the owner of a marketing company that had expanded nationally too quickly and was facing the harsh reality of having to close down offices just to survive. I worked with an amazing building technology company that had patented a strong and realistic metallic paint that could be applied to any surface to give it not only the look but also the touch and solid feel of metal, just without the actual weight of metal.

In hindsight, the year working at a strategic level across so many business was more valuable than the three years I spent earning a University degree.

The point of sharing this story is that much like Stacy Kildal’s blog post, after a while you start to spot the same patterns emerge time and time again. The businesses that are struggling share a very similar set of challenges and the businesses that are powering along share a common set of systems and practices.

The worst offenders were those business owners or managers that just did not understand how they actually made money; that is basic financial literacy. Typically the research interview I’d do would go like this:

Daniel: So, how is Widget Corp tracking this year?

Owner: Yeah, really well. We’ve got a big new contract to make Blue Widgets and I’m really excited about presenting at Widget International 2006 next week.

Daniel: Wow, that sounds great. And are you turning a profit this year?

Owner: I think so, but you should speak to our accountant.

Daniel: OK, so tell me about these Blue Widgets. How much is the contract worth?

Owner: Its a huge contract, one million dollars for an initial order of 5000 Blue Widgets

Daniel: Great. So how much money will you make on each widget?

Owner: Hmmm, I’m not sure, you’d have to speak to our accountant.

Daniel: Ok, I’ll definitely do that. So do you think you made a profit selling Red Widgets last month?

Owner: We must have, I mean the bank balance went up. But really I leave all that financial stuff to our accountant.

Daniel: Ok, and which office is your accountant in?

Owner: Oh, she doesn’t work here. She’s part of Big Accounting Corp in the city

Well, you get the idea. And it wasn’t always left to the accountant. Sometimes it was the financial controller, the bookkeeper, the general manager — even a wife or husband. I was once even sent to talk to Jenny at the front desk who had done a course on Xero.

These owners and managers were all smart and talented people, so it wasn’t a case of not having the intelligence to understand cash flows. Rather, they chose to maintain an attitude of “that financial stuff is not my thing” or “I don’t have time to look at all the financials”. Instead of taking responsibility for knowing the financial health of their business, they place all their faith in some vague accounting higher power that would magically sort itself out at the end of the financial year.

Hopefully everyone reading this post is nodding their heads right now. You’re either nodding because you’ve seen this in your own clients, or you’re nodding because I’ve just held a mirror up to you.

What I’ve come to learn is that this doesn’t have to be a huge big thing, especially if you’re not naturally numerically minded. In many — if not all — businesses, success often comes down to a few simple metrics that you need to monitor every day, week, month, and quarter.

For example, with WORK[etc] — the business — I’ve been keeping a daily record of the count of site visitors, number of free trials, dollar sales of new customers, and dollar sales renewals e-v-e-r-y s-i-n-g-l-e day for the last 5 years. Looking at the spreadsheet now I can see I’ve missed exactly 32 days out of more than 1825 days.

The reason I track these metrics? Firstly, these are the numbers that drive my particular business. Site visitors turn into trials, trials turn into new customers, new customers turn into long-term customers.

Secondly, these numbers don’t lie and although they don’t tell the whole story, they are enough to clearly highlight trends week to week, month to month.

Finally, I can collate these numbers entirely on my own. I’m not waiting on anyone else to pull a report or send an email. These are my numbers; I own them (and they kind of own me too).

Our simple daily KPI report, sometime circa 2010

Our simple daily KPI report, sometime circa 2010

So how do you set up your own Core Metrics?

Communication is key when dealing with whoever “looks after all that financial stuff” for you. Explain that you want to create a top-level, simple metric that you can track day in and day out. It might be as simple as knowing the profit per widget and how many widgets were shipped yesterday. Or it might be knowing your staff’s average utilization rate and how many client hours were recorded on timesheets yesterday. Of course, you can do all this in WORK[etc] already, but you want to get a financial expert’s advice on what to actually be tracking.

CMA and author Michael Di Lauro recommends another important step in the communication process: get on the same wavelength as your accountant. If you don’t have a solid accounting background yourself, chances are you won’t be familiar with technical bookkeeper jargon. If so, don’t hesitate to ask them to use plain English to explain things. As Di Lauro says, “Translating all that techno-talk into language you understand should be part of the package.”

Put another way, never be afraid to simply say, “I don’t quite follow this, can you explain it in another way for me”. Keep asking this question until you arrive at a very simple metric.

Whether you’re reporting or financial or non-financial data, an all-in-one CRM can make things easier by collating information across all activities in your business, in the single online interface. As long as the data is in the system, you can generate a report with a few clicks. Native integration with accounting software like QuickBooks and Xero will also make sharing and collaborating on your financials an easier  task.

Once you’re set up with your simple tracking report, make it part of your daily habit. For me this is literally four minutes’ work when I sit down with the first coffee of the morning.

See all

Featured Posts

7 Clever Add-Ons That Supercharge Google Drive Productivity

Do more with WORKetc CRM’s Google Drive integration and these clever add-ons. We rolled out a significant new feature to WORKetc CRM’s Google Drive integration a while back, giving users access to Team Drives from within the WORKetc CRM environment. In the spirit of that update, here’s a curated list of seven add-ons for Google […]

4 Key Steps to Turn Your Sales Team into a Deal-Closing Juggernaut

Using WORKetc CRM for a more efficient, productive sales team. Selling is simple. You get a sales lead, you offer goods and services, the customer picks one and pays you. But just because it’s simple doesn’t mean it’s easy. The idea itself may be simple, but the actual execution is a difficult task requiring a […]

3 Must-Know Strategies Your Business Needs For Successful Projects

Stop wasting money with these 3 must-know project management tips. Ever lost money on a project, even one that you managed to complete? Well, you’re not alone. In their 2018 Pulse of the Profession report, PMI estimates that 9.9% of every dollar is wasted due to poor project performance. For every $1 billion invested, that’s […]

WORKetc CRM Success: Celebrating Your Big Wins in 2018

A brand-spanking new Gmail add-on, an overhauled iPhone app, and much faster search capabilities—these are just a few of the massive changes we introduced to WORKetc in 2018. None of these improvements, however, would be at all possible if not for the continued support and dedication of our loyal WORKetc users. And since there’s no […]

4 Simple Tips For Max WORKetc CRM Efficiency From Real Users

WORKetc CRM tips and tricks, tried and tested by real users. A CRM is an investment. And as with every investment, you’ll want to squeeze a much juice as you can out of it. Here’s a new batch of tips on how to do just that, from real WORKetc users running their small businesses on […]

3 Critical Resolutions for Small Business Success in 2019

Keep the fireworks going all throughout 2019 with WORKetc CRM. If you’re anything like me, New Year’s resolutions are never just about your personal life. It’s also about probing deep and seeing what you can do for your business. It’s about identifying changes that have real, tangible, and measurable impacts. Here are a few ideas […]