How do you monitor your business?

[Excel Expert]

My business is going through a big rejig at the moment so I'm looking at the best way of monitoring how my business is doing. I'm also looking into expanding what I monitor to cover aspects that I may not have thought of before.

Apart from business plans and SWOT analysis what methods do people use here and how does it benefit you?

 

[webgeek]

Social mentions / public sentiment / online reputation - can often be monitored with an Alerts type of service, so that if you are being talked about, you'll have visibility. Sometimes the financial fires don't heat up until well after the market chatter.

Organic search rankings are watched by many, purely because rankings -> traffic -> conversions -> £'s.

For paid search it's purely down to Return On Ad Spend and gross profit.

Social media is a view to mentions by influencers and engaging encounters with anyone relevant to the channel.

If the metrics don't represent something actionable by management then it's information for curiosity sake rather than decision making data / KPI's.

 

[barryo]

Most people monitor results, but that's like driving a car with your eyes on the rear view mirror. If a problem's building that you're not aware of, it can be more difficult to deal with than if your monitoring system had flagged it up before it happened. Much more effective to monitor activity.

A classic example is sales. Most people look at their sales figures, but if they've gone down there's nothing you can then do about it. Much more useful to have identified a drop in activity that leads to sales, such as number of enquiries received, which you can then do something about.

The most important monitoring has to be cashflow. Very easy to set up a spreadsheet to forecast cash days, weeks and months ahead, updated daily. Objections to this that I've heard usually take the form of "what's the point in forecasting when we don't know what our sales are going to be." This is just a weak excuse for laziness. Although it's true that the further forward you look, the further away from your forecast the results are likely to be. But intelligent estimating will give you an adequately clear picture of rises and falls. You know the exact dates when major peaks and troughs such as wages, VAT, PAYE, rent and so on are going to occur, and it's not rocket science to estimate how much they will/might be. Once you've plugged in all the costs (and estimated costs) to the forecast, it's simple to apply a "sales revenue required" line to cover them. Most businesses only have a few cost transactions and cash receipts each day and it only takes a few minutes to adjust them. An added bonus of a daily cashflow s/sheet looking several months forward and updated daily is that it blows the socks off your bank manager. When he knows you monitor your business in this way, you've got a head start when you need to ask him for money.

 

[Excel Expert]

Thanks both.

At the moment I have a spreadsheet that monitors cash flow, profitability and performance against my original projections. It is also monitoring marketing spend against result, so I can work out which is most effective marketing methods.

What about working out how you stand in the market place or if your clients needs are changing? What I want to try to do is keep one pace ahead of the market and spot demands and needs quicker.

 

[webgeek]

Personally, I don't care if I'm 3rd or 300th. If the sales trendline is going the right direction, gross and net profit are keeping pace, client retention is on track, then I care. After all, BT aren't asking me to pay my monthly invoice based on my market share, forcing me to pay more if I lose ground on the pack.

The keeping ahead of the market, and on top of client needs, is a great question that I'll be perking up to hear answers for!

Knowing what developments there are in the industry, thinking logically as to what the obvious next steps must be - those should help prepare for the future. But talking with clients, sharing new product/service ideas with them and observing their interest and uptake is one of the best ways I know of... Surveys are nice, but conversations are gold.

Demand is a funny thing. The demand generation people believe in creating it. The lead capture people believe in grabbing the people who have it. The sales people wanna satisfy those who have it so they don't have it any more.

For overall measures, I think volume of sales from returning customers is a good indicator. If you compare to a year ago, it'll say a lot about creating a defensible position within the niche.

Total annual (and lifetime) profit per customer is a nice one too. Knowing whether your margins are widening or slimming, and whether the customer lifespan is increasing or becoming knee-jerk, should give strong hints as to whether you're on the right path or not.

At some point I start thinking that instead of counting the beans, I should be out there planting and picking them...

 

[Excel Expert]

I hear you and completely agree with you on the vital ones to watch are your own vitals, which I believe I already have covered.

The problem I'm trying to head off is that I'm moving the business in a new direction. Currently I provide very bespoke services in the form of spreadsheet reporting tools and spreadsheet applications for high end users. We only get through about 3-4 projects a month so it is very easy to keep a track of. It is a very niche market place and I have a few competitors. It is a close knit little community and we are always chatting, meeting up for the odd drink etc so it is very easy to monitor what is happening out there.

The market I will be moving in to is ready made spreadsheet applications and templates for small businesses. The templates will probably be free nut the applications I will be selling for between £8 - £20 depending on what they are. So I'm moving from a bespoke to mass selling and I want to ensure I'm ahead of myself and I can monitor for when I screw up as well as the market changing.

When the sales get going I would ideally like to be able to tell what is selling? what isnt? who is buying? who isnt? what marketing is or isnt working?. Most of these reports will not be ones where you enter numbers but ones that force me to go and check facts A, B and C before making a decision.

 

[webgeek]

Sounds like an exciting challenge ahead!

I would think that campaign tagging on all promoted URL's so you can segment and get the attribution right would be a big concern.

But if you're going for a low average sale, high volume then an end-to-end lead capture + nurturing package, like HubSpot or Pardot would give you the ability to create a series of emails and deliver them based on the interests of the prospect audience, and give you that end to end visibility, from social to email and organic and paid search, integrating the prospect actions, clicks, opens and what links they were enticed to click.

Automating the capturing, scoring, nurturing and reporting can revolutionise your approach, if you're not already making use of such.

Food for thought

 

[Excel Expert]

I would think that campaign tagging on all promoted URL's so you can segment and get the attribution right would be a big concern.

This is certainly something I will be trying to set up. Is there a standard methodology for looking at the data gathered or is it simply looking for which gets the biggest numbers of visits and then conversions?

But if you're going for a low average sale, high volume then an end-to-end lead capture + nurturing package, like HubSpot or Pardot would give you the ability to create a series of emails and deliver them based on the interests of the prospect audience, and give you that end to end visibility, from social to email and organic and paid search, integrating the prospect actions, clicks, opens and what links they were enticed to click.

I used to watch Hubspot's weekly video podcasts and I did learn a lot from them, but I never got around to using their services - I will revisit them shortly.

 

[webgeek]

This is certainly something I will be trying to set up. Is there a standard methodology for looking at the data gathered or is it simply looking for which gets the biggest numbers of visits and then conversions?

There's a URL builder tool on Google which let's you input the campaign and other details, so there's a lot of flex. But, the baseline source & medium really don't change - email is always email, referral is just that, then the site name for the specific source.'

But, you're not going to know in advance how successful a campaign might be. We found training courses being purchases from archived email links that people filed away until later in the year, when their continuing professional development annual credits were due, and suddenly started finding them clicking and buying. The emails had tagged links in them so that even a year later, we could see that it was the March 2012 Content Issue and that the link of interest to them had to do with training courses
in Miami in December.

Tag them all. Banners, text ads, link swaps, every time is the right time to add that tracking code on the end.

--------------

HubSpot has come a long way from the 'inbound for dummies' they were post-launch. They're pretty affordable and have some utilities for quickly making call to actions / lead capture forms, then automagically create the tracking code and apply it.

The lead nurturing automation is pretty slick and is definitely usable. When you figure out how much time it saves vs proactively sending out email campaigns to an ever increasing pool of prospects, most marketing directors seem to rate an automation tool as being the equivalent of one full time marketing/sales rep, minimum, which isn't bad for a low end price of about £100 per month.

Segmentation, after you get beyond the source and medium, typically is based on campaigns which can then further be broken down by date, demographic, or whatever taxonomy makes sense (represents who you are targeting). With several layers, the performance can be examined in excrutiating detail or glanced at high level, all with relative ease.


Cheers!

 

[Blood Lust]

My business is going through a big rejig at the moment so I'm looking at the best way of monitoring how my business is doing. I'm also looking into expanding what I monitor to cover aspects that I may not have thought of before.

Apart from business plans and SWOT analysis what methods do people use here and how does it benefit you?

Upper Level: The board creates a budget once a year (normally) and communicates it to the middle management. They assess the montlhy performance reports from the middle management to determine if corrective action needs to be taken on it (if under performing when it shouldnt be) or if the yearly budget needs to be altered.

Middle Level: This consists of department managers who have to achieve budget targets for their area of the business. These targets are normally monthly revenue and expense targets. They collect the daily or weekly revenue and expense information from the lower level to assess if their department will meet its monthly targets. If their department is significantly under or over performing they investigate why. They then take corrective action on the lower level if appropriate. They report their monthly performance to the upper level using email, paper or an accounting system. Another method is balanced scorecards.

Lower Level: This level consists of the workers who have daily or weekly revenue and expenses targets derived from their departments monthly budget. Their performance is monitored by having them communicating daily or weekly revenues and expenses to the middle level. This can be done via email, paper or an accounting system. Another method is balanced scorecards.

Budgets and the flow of information upwards communicating performance against budget targets is how the top level monitors the performance of its business.

I hope thats what you were after.
BL

 

[Excel Expert]

Hi BloodLust,

All great but at the moment I'm just a one man operation. ;-)

That is exactly the sort of reporting processes I help companies with in my current bespoke world. Once we get in to higher levels of products we will use a very similar process to control things.

Internal and performance wise I think I have all the bases covered. What I'm looking for is reporting on what the market is doing, which areas are worth expanding in to, what I should be moving out of, what are the risks of those actions etc. I'm not very good at explaining I know, because I dont really know if what I'm after is actually to be found in a report or is more likely to be found in a gut feeling

 

[Alan R Price]

It's important for the owner(s) of any business to take time out from time-to-time, to work on, rather than in the business. In my coaching business, we recommend at least half a day a week: this is for basic things like marketing, admin, planning and monitoring. Other non-core tasks, if they cannot be outsourced, need to be done in additional time set aside for the purpose.

It is also important for the owners to work out what they want from their business: do they just want to own their own job (which is fine), or do they want to build up something that somebody else will buy in the future? If the latter, they need to work on their vision and goals for the business, and implement formal (i.e. written) systems, procedures and controls, to facilitate expansion, and to demonstrate to any purchaser that any change of ownership will involve a smooth transition, with any new management simply able to take over where the old left off.

As a minimum, there should be a written business plan (to give the business direction), together with cash flow and profit and loss forecasts, that can be reviewed monthly against actual performance, so the positives and negatives can be identified and acted upon. Should a one-man-band have a written business plan? Of course: it gives him focus and he is more likely to commit to implementing it if he has taken the trouble to write it down.

We also recommend that management take a day out of their business at least twice a year, or preferably once a quarter, in a "neutral" location, to review progress and plan for the next 90 days. This is often best done with the aid of an independent "facilitator", whose role is to act as an independent "chairman" to stimulate discussion and encourage the owners to open up and share their views and opinions.

 

[Blood Lust]

Hi BloodLust,

All great but at the moment I'm just a one man operation. ;-)

That is exactly the sort of reporting processes I help companies with in my current bespoke world. Once we get in to higher levels of products we will use a very similar process to control things.

Internal and performance wise I think I have all the bases covered. What I'm looking for is reporting on what the market is doing, which areas are worth expanding in to, what I should be moving out of, what are the risks of those actions etc. I'm not very good at explaining I know, because I dont really know if what I'm after is actually to be found in a report or is more likely to be found in a gut feeling

You should create a budget. With you being a small business I'd advise using rolling budgets where you'd ruffly estimate the revenues and expenses for each month over the next year. The targets set in the rolling budgets are a guess but will become more accurate as you build up experience of demand in your targeted markets.

After a few months of adjusting forecasted revenues until you reach the point where there's a close match between actual revenues and predicted ones you'll be able to see how much demand there is for your product or service in the market place.

Tools used to help when setting your revenue forecasts are:

PEST Analysis: A business examines changes to Political (new laws, taxes or regulations), Economic (how the economy is peforming), Social (trends and demographics) and Technological (new innovations) factors in the external environment to predict how they will impact sales.

Boston Consulting Group Matrix: Each product or service you offer is evaluated to determine if its a star, cow, dog or problem child. Over time products and services which are on their way out (dogs) reveal themselves as declining levels of revenue. Those growing (problem children) are revealed by growing revenues and expenses over time. Cash cows are those with a large market share acting as a cash cow for your business. Stars are those with a huge market share (market leaders). You'd put your rivals products and services into the matrix too to compare where you stand against them. This tool, if you find a website on it or book, tells you the strategies you should use for stars, cows, dogs and problem children.

Hope that helps
BL

 

[morespace]

To answer the initial question, one of the best ways of monitoring customer behavior is through website analytics.

 

[Excel Expert]

Alan - The time thing has always been a problem for me. I work with clients all around the world and I change my hours to suit. I've been working with US clients this week so my working day has been 1pm to 3am. Next week I could be working with Australians and my working day will be flipped. Having a dedicated time slot is not that simple. However that is in my current world of bespoke solution, as I move in to off the shelf type products that becomes a lot more practical and something I hope to do more of.

Blood Lust - Thank you, the Boston Consulting Group Matrix looks ideal, I shall do some research on that one. I dont suppose you have any links good articles on it?

Morespace - Web analytics to date has not been a big element of my monitoring. As a bespoke service there is very little data to play with. However when I move in to the "off the shelf" arena I think it will become my life blood of data. It is an area I need to work on so I gather the maximum from the available data.

BTW - Once I work through all the methods on this thread I will try to produce some free Excel templates and tools based on them

 

[Blood Lust]

Alan - The time thing has always been a problem for me. I work with clients all around the world and I change my hours to suit. I've been working with US clients this week so my working day has been 1pm to 3am. Next week I could be working with Australians and my working day will be flipped. Having a dedicated time slot is not that simple. However that is in my current world of bespoke solution, as I move in to off the shelf type products that becomes a lot more practical and something I hope to do more of.

Blood Lust - Thank you, the Boston Consulting Group Matrix looks ideal, I shall do some research on that one. I dont suppose you have any links good articles on it?

Morespace - Web analytics to date has not been a big element of my monitoring. As a bespoke service there is very little data to play with. However when I move in to the "off the shelf" arena I think it will become my life blood of data. It is an area I need to work on so I gather the maximum from the available data.

BTW - Once I work through all the methods on this thread I will try to produce some free Excel templates and tools based on them

http://faculty.mu.edu.sa/public/upl...ssentials_of_Marketing__3rd_Ed_0273693581.pdf

Product Life Cycles (Their p130) - You can determine from tracking sales over a period of time if your product/service is growing, reached maturity or has become a dog.

Boston Consulting Group Matric (Their p133) - Explains strategies to adopt for stars, cows, problem children and dogs.

Theres quite a few other theories in the book you could also apply. My Uni gave me a copy when I did my business studies degree and its very handy to have. I'd recommend treating yourself.

I dont know what sector you work in but you might want to check out industry standards for your type of business - percentage of complaints, costs as a percent of sales, delivery times, bad debts, receivable payment times, etc, etc. Then you could benchmark your own performance against those industry standards and then when you've grown try to better them.

 

[Blood Lust]

Duplicate, please delete

 

[SwissChris]

What I do in my small businesses as MD is operate it like a mini version of a quoted PLC.

We set pretty basic quartely targets that are easy to drill down, like number of invoices issued, average invoice value, revenue, expenses etc etc.

Then at the end of every quarter we 'report' and compare. We can see very quickly if we are slipping. You can't really go down the pan in one quarter.

The only thing with very small business is that you do get spikes in the figures - two 'lucky' punters can double your turnover one quarter and if you don't get a lucky punter in Q2 you might thing you're slipping when in reality you're not.

Given that most your competition in small business wont be doing anything of the sort it doesn't take much effort to give you quite an edge.

 

[Excel Expert]

Thanks Blood Lust - I will do just that

By the way - I produce spreadsheet tools for large corporations. Mainly reporting tools, KPI dashboards etc. I will be moving in to producing ready made tools for small businesses like stock control and simple accounting. So rather than being bespoke one offs it will be bulk downlaods

 

[Blood Lust]

What I do in my small businesses as MD is operate it like a mini version of a quoted PLC.

We set pretty basic quartely targets that are easy to drill down, like number of invoices issued, average invoice value, revenue, expenses etc etc.

Then at the end of every quarter we 'report' and compare. We can see very quickly if we are slipping. You can't really go down the pan in one quarter.

The only thing with very small business is that you do get spikes in the figures - two 'lucky' punters can double your turnover one quarter and if you don't get a lucky punter in Q2 you might thing you're slipping when in reality you're not.

Given that most your competition in small business wont be doing anything of the sort it doesn't take much effort to give you quite an edge.

Yes, budgetary control would give him an advantage.

For non-financial targets, targets set based on industry standards (customer service, errors, waste, percentage of sales which are costs, etc) could be put on balanced scorecards.

Then when he checks to make sure he met his revenue and expense goals with the budget he can also make sure he's ticked off all the criteria on the balanced scorecard too critical for success in his particular industry.

 

[Excel Expert]

SwissChris - Those lucky punters have thrown my figures off in the past so I know exactly what you are talking about there. They produced massive spikes making my reports look miserable at first glance - If you glanced at the charts you would have thought I had 10 rubbish months rather than 10 average months and two exceptional months.

I'm hoping to set up a routine of weekly checks, monthly checks and quarterly checks with each set of checks checking different things. The big decisions will be left until the quarterly checks as weekly / monthly does not produce enough data to act on

 

[Blood Lust]

Thanks Blood Lust - I will do just that

By the way - I produce spreadsheet tools for large corporations. Mainly reporting tools, KPI dashboards etc. I will be moving in to producing ready made tools for small businesses like stock control and simple accounting. So rather than being bespoke one offs it will be bulk downlaods

The hard part is off course tracking down a source of industry standards for what you do. I don't know if you'll find ratios specific to your industry in here but it has a lot of material:

http://www.bakeru.edu/library3/subj...nformation/industry-norms-and-business-ratios

CIMA, ACCA, IOM, and maybe the professional institute that covers IT (I dont know that one) are all research targets too.

 

[tony84]

Interesting post, I have never thought about this before.

I monitor:

• The number of enquiries I get/Where from
  
• How well my website is doing
• How much i earn from each client and what my average is
• When im expecting to get paid, so I can budget.

I dont do the first 2 in any official way, I just periodically have a glance through to see if im getting most of my business from one place or another and if my website has moved up.

The last 2, I have a good old spreadsheet for.

 

[vishal777]

Thanks both.

At the moment I have a spreadsheet that monitors cash flow, profitability and performance against my original projections. It is also monitoring marketing spend against result, so I can work out which is most effective marketing methods.

What about working out how you stand in the market place or if your clients needs are changing? What I want to try to do is keep one pace ahead of the market and spot demands and needs quicker.

You shall meet your client personally. This can help understand them in a better way. Sometime meeting face to face with a client gives more clarification than any kind of surveys.

 

[Alan R Price]

Carl

Have you tried setting yourself a default diary? You split your working day into blocks of time, allocated to particular tasks, or types of task, with a chunk left for contingencies - things not planned but which crop up. You factor in business planning and monitoring as part of this. If you are working odd hours, you simply start the diary when you start working.

 

[Excel Expert]

Vishal - That is exactly how I work now with my bespoke clients. What I'm worried about is now I'm moving to off the shelf solutions I will lose out on that connection. So I'm looking for things to help me keep that communication going.

Alan - The plan is to get my working week / month a lot more planned so I will be adopting something very similar. Half the reason I want to move from bespoke to off the shelf is that panning to that level is impossible with bespoke work