It always amazes me when I go into businesses and sit with the owners for the first time and start to talk about their business and how it is going. As we start the conversation, exchange the pleasantries and get into a business discussion, I ask a question that stops most business owners in their tracks…. “What is the most profitable product or service you sell and what it the least profitable” most stumble, er and um before saying “Well Garry I think it is probably, maybe these”.
Running a business and not understanding factors such as how much profit you are making is paramount to sailing a boat with holes in the hull, it is only a matter of time before it takes on too much water and sinks or at a minimum makes your journey stressful, unpleasant and worrisome. Most people have an accounting package of some variety in their business and most account packages have reporting capability that can give you great insight into what is happening in your business especially in terms of profit and loss and cash-flow, please take some time and get to understand how these reports work and review them on a regular basis or discuss this with your accountant and get him or her to explain how to read these with you.
Remember “You cannot fix, what you cannot see” way to reduce costs, improve profits, decrease efficiency losses are all there ready for you to action. If you are reading this now saying well I don’t have an accounting system and I don’t need it I am only a one man or women business…STOP before you say another word, change your thinking because this type of thinking will limit you and cripple you business. Go online look up MYOB and get yourself an account system and open up your view on what is making your business work it will allow you the information to start pulling the financial levers in your business for consistent and ongoing improvements and if you have an accounting system and you are not using it to consistently investigate what is working or not working in your business…you had better start using this in your business improvement strategy from today.
If you have an online business and this is where I spend 80% to 90% of my coaching time with my clients nowadays, then you are so lucky because this area of business is skyrocketing in popularity and end user acceptance. Today you have an incredible array of tools that allow you to monitor each and every part of you online business in incredible detail and the very best part is…. Wait for it!….. They are all FREE, yes free not a single cent is outlay for you or your business, Google provide tools such as Google Analytics, Google Website Optimizer, Google Webmaster Central that allow you to monitor down to the smallest detail of what people are doing on your site, what is working and what is not.
Each and every aspect of the online business is trackable and measurable and I love this, no stories, nowhere to hide, just the outcomes that allows you to make a well weighted decision on what to change, modify or enhance to great even better results or in fact what to stop immediately because it is just simply costing you and your business money.
I have a client that had over 200,000 unique visitors to her website each and every month yet even with this level of traffic she lost money each month on her website, just with the addition of the free Google Analytics on her site and then 1 months worth of data review , we were able to see what keywords were driving what traffic from what specific search engines, what pages those keywords were landing on and then what on those pages were causing the customers ( well in her case potential customers ) to leave the site without buying.
Within 90 days the website with a series of small tweaks and changes including graphics, some online form field changes and several simple page layout changes created a cash flow win fall of more than $50,000 in revenue at 46.2% net profit per month. Within 6 months that same website that was losing money each and every day is now in November 2011 produces an average of $148,634 per month at 64.7% net profit.
Because of this huge online success, this client has now shut down her physical store and invested in expanding the online store and is looking for a monthly income of $350,000 while holding or increasing her net profit by June 2012.
The moral to the story is simple, had we not been able to measure and see what the business was and was not doing, the required changes that made such an improvement possible would never have been able to have been put in place and our client ( and my be you ) would have continued to loss money till the online business was just shut down.
If you are online in business or thinking of going online you need to have Web Metrics and Analytics as part of your core business strategy, you cannot afford to ignore the elephant in the room one single day longer.