Transactions, customers and turnovers are essential components of every business. An understanding of your financial reports means that you can start to focus on specific numbers like these.
I subscribe to the two well-used phrases about measuring and focusing that are:
- “What you measure you can manage”, and
- “What you focus on grows”.
Both make sense as the more you put your mind to something, the more likely it is that the world conspires to make it happen for you. It’s a bit like when you decide on a new car to buy. Suddenly, everyone seems to be driving that car. In reality nothing is different, it’s just that the car is on your mind.
The same thing happens when you measure the number of transactions, the number of customers or the turnover of your business, you become more aware of the results and become attuned to changes in the business.
One of my clients wants to build the business so that she can take home more pay and be happy that her decision to leave her corporate job was the right decision for her. By focusing on the number of transactions every day, she has been steadily increasing her income and been able to increase her take home too.
Another client has been focusing on the number of clients they have. They know that once they start working with a client, they return year after year. They also know the average amount each client spends each year with them and so by focusing on increasing the number of clients they know they will be increasing turnover and profits.
A retail client focuses on the turnover. For them, the number of transactions and the number of clients are not as relevant as simply keeping track of the turnover day by day. Since opening the business six months ago, they have a good grasp of the days of the week when they do the most business and the days when they do the least. This helps with rostering staff and also allows them to run special promotions on the low days to boost the turnover and get more people through the store then.
In the event that there is a downturn in the economy, your industry sector, or simply in your business, focusing on the numbers will help to identify what is perhaps going wrong, and give you clues on areas for improvement.
Being aware of what is happening in your business is vital for survival. Whether you are struggling, happy where you are and want to keep the status quo, or you are keen to grow your business to the next level, focusing on the numbers will make a significant difference to your results.