As we step into the third quarter of the New Year, have you stopped to closely assess the performance of your business? Remember those New Year’s goals? Those bold resolutions? Those challenging benchmarks?
It’s easy to get lost in the hustle and bustle of business once you get into stride, but assessment is as important to your business success as taking action. If you truly intend to grow your business, you must work on your business with as much commitment as you work in your business. If you haven’t taken time to assess your business, or you’re not sure where to start, then this guide is for you.
How to Take the Temperature of Your Business Success
To properly assess where your business stands, you have to start with the data you’ve recorded.
Gasp! A record of data?!
Yes. A record of data. If you’re not tracking your key metrics and progress then there is no way to tell whether or not you’ve improved. If you’ve fallen into the trap of not tracking the effectiveness of your marketing activities, your sales figures, or your overhead then you should probably print and save this post for next quarter and go set up some systems for recording your progress NOW!
What to Evaluate and What to Look For
There are 5 primary areas you must evaluate in your business. You can include more, but these are the basics.
Sales is one of the first places you want to evaluate in your business. Sales are the life of your business. If you fail to close sales, it’s only a matter of time before your business will crumble. Ironically, business owners often miss the boat here because they focus more on advertising and marketing than they do on closing deals.
To properly evaluate your businesses sales, you should have a benchmark for the number of sales you need to close each month. Then, you need to regularly assess how well you were closing those deals. Your sales are responsible for covering all of the expenses of your business, so make sure you factor them in when calculating the amount of sales you need to stay profitable.
Also, be sure to take the time to assess your selling behaviors. Are you making regular offers to your customers? Are you following up with customers regarding sales opportunities? Are you contacting enough prospects each week to better your chances of converting a sale?
If you only extend offers to a handful of prospects each week your conversion rates are going to be low. At some level sales is a numbers game. You must get out there, put your best foot forward, and ask for the sale. Then, assess whether or not your level of sales is up to par.
MARKETING & ADVERTISING
The next area you want to evaluate in your business is marketing and advertising. Marketing and advertising are important because they help you reach the target audience you desire to sell to. But if you’re not evaluating the effectiveness of your marketing and advertising strategies, you could be throwing money down the drain.
It’s never been easier to track marketing activities than it is now. If you run an ad in a magazine, use a tracking phone number. If you use a sales page on the Web, be sure to include tracking scripts. There is no excuse for conducting a marketing or advertising activity that you cannot track. Unless you’re doing mainstream television advertising, which in all likelihood you aren’t, you need to take the time to find out which marketing materials and advertisements are the most effective in your business.
Focus on using those effective materials repetitively until your well of prospects runs dry. Only then should you shift your focus in marketing and advertising. If you properly track your marketing and advertising activities, you don’t have to worry about throwing money out the window. It’s time to get serious and scientific about your marketing and advertising efforts.
Monitoring your expenses is essential for ensuring the success of your business. It is very easy for expenses to get out of hand if not closely managed. This is especially true if you’re an online business. Purchasing that extra course, or joining a membership website to help your networking efforts may seem like a good idea at the time, but you could quickly find yourself overspending.
Your objective as a business owner should be to limit overhead and expenses as much as possible. Tracking your expenses closely will ensure you know exactly where you’re missing the mark. You should also evaluate how much you’re saving for expenses like taxes, which also include Social Security and Medicare tax.
This is an area that business owners often overlook, and when the time comes, they find themselves in very hot water struggling to come up with the financial resources necessary to pay their tax obligation. Don’t let this happen to you. Closely monitor your expenses and be sure that your socking away enough of your income to account for these expenses when they come due.
Another vital area to assess your business is what I’ll call “systems” for our purposes. From startup through the growth phase of your business, you should analyze and record the systems you use to carry out specific activities within your business. If you are not keeping a record of the functions that you perform in your business, in a systematic way, you’re going to find it very difficult to work on your business.
You should strive to create systems that other people can easily use. This will make it easy for you to delegate responsibilities to your staff so that you can leverage your time to do other things. Always make sure you take the time to step back and look at the structure of your business. Look at the places where you can delegate certain functions, and create a system for how you want those functions to be carried out.
If you do this properly, this will enable you to hire and train someone to do those specific tasks without worrying about whether or not they are doing them correctly. Having well-organized systems in place is the key to scaling your business and maximizing your entrepreneurial potential.
Lastly, you want to take time to make note of any trends that you see occurring in your industry, in your business, and with your clients. This means that if you see a specific question being asked by your clients over and over again, you should consider adding the appropriate response to your FAQ.
Or, maybe your clients voice a common need that isn’t being met, and this may indicate that you should consider providing a product or service to meet that need. Or maybe you have a common complaint with a product or service, which means you need to see how you can resolve that particular issue.
Also look at the changes occurring in your industry, and consider how you will embrace those changes, because changes can often signal opportunities for you to take the lead in your field. If you’re going to be successful in business, you need to operate with a sense of clairvoyance. This doesn’t mean that you need to be a psychic. It just means that you need to be able to anticipate the things that are going to affect your business, and make wise decisions on how to bring about positive results.
Make the Time to Evaluate
It’s easy to blow off evaluating your business, but you really can’t afford to do that. Evaluating your business should be a function (system) that you conduct on a regular basis. You may want to evaluate some components of your business more than others, but evaluating all five key areas covered here, on a quarterly basis, will ensure that you stay on track.
The only way you can improve in any one area of your business is by evaluating what you’re already doing. Trying to make improvements without knowing where you stand is like trying to hit a bull’s-eye with a blindfold on. You may hit the mark, but you have no idea how you did it. And, the “how” is very important.
The “how” is important because when you know “how” you create a specific result, you can repeat that behavior. So if you conduct some activity in any key area of your business, and generate excellent results, knowing how you did it enables you to repeat that behavior over and over again for greater success.
Sometimes business owners avoid evaluating their business because they’re afraid of what they might find. In some cases it can be very painful to see that you’re not measuring up, or that you’re not as profitable as you would like. But burying your head in the sand won’t fix the problem. You need to be honest with yourself, and if you truly want to succeed in business and life, you have no other option.
I think your homework assignment is obvious…it’s time to evaluate your business, baby!
So tell us, when’s the last time you set aside uninterrupted time to evaluate these five key areas in your business? Do you evaluate your business on a regular basis? Are there other areas that you feel should have been noted here? If so, let us know in the comments below.