Any entrepreneur seeking sustained success and growth must understand that knowing financial numbers is a necessity. With the highs and lows and unexpected challenges in business, the power of knowing your numbers is an invaluable weapon to prevent these situations.
In this episode of Influence By Design, Tim and Samantha talk about understanding your numbers and the specific ones you need to focus on.
Running a business successfully relies on data to identify inefficiencies, areas for improvement, and untapped opportunities. And not understanding how the business is performing financially takes away your power to make informed decisions.
Understanding your numbers will empower you to confidently navigate uncertainty. It offers insights into what services and processes yield the greatest return.
So, let the power of knowing your numbers be your guiding star in making sure your business moves towards your vision.
IN THIS EPISODE YOU’LL DISCOVER:
- The value of having financial software (05:05)
- Why you need to pay attention to your opt-ins (10:20)
- Measuring the strength of the nurture process via appointments (11:38)
- The significance of recording show-up rates (12:10)
- The impact of measuring conversion rates (12:40)
- Understanding average customer value (13:58)
- Five metrics that Sam and Tim track weekly (19:20)
- “We need to record our show-up rates, because if we see these taking a dip, then we know that something needs to change in our pipeline.” -Samantha Riley
- “There’s something about entering the numbers in yourself – it makes you more responsible for what they actually mean.” -Samantha Riley
- “Running a business is largely running a financial operation. And if that’s not managed well, what you’re going to find yourself is in a whole world of hurt and pain.” -Tim Hyde
- “A business is there as a vehicle to create profit for our lifestyle. It’s not just there for us to turn up to work and not make any money.” -Tim Hyde
SUBSCRIBE & REVIEW THE INFLUENCE BY DESIGN PODCAST
Thanks for tuning in to this episode of the Influence By Design podcast. If the information in any of our conversations and interviews has helped you in your business journey, please head over to Apple Podcasts, click the 3 dots in the top right corner of your smartphone screen, follow the show, and leave us an honest review. Your reviews and feedback will not only help us continue to deliver valuable content but will also help us reach even more amazing entrepreneurs just like you!
BOOK AN INFLUENCE AUDIT
If you want to be known as the leader in your industry, book a quick 15-minute Influence Audit.
We’ll work together to identify:
- Your current situation and immediate opportunities for growth
- Uncover the #1 thing holding you back from not being booked as an industry leader
- Develop a 3-step implementation plan to increase your authority and visibility
WHERE TO FIND TIM HYDE
- Website: https://winmoreclients.com.au/
- Facebook: Win More Clients
- Instagram: Win More Clients
- LinkedIn: Tim Hyde
CONNECT WITH SAMANTHA RILEY
Samantha Riley Snippet (00:00):
Being the driver of my business, I need to know this information. And it is one area that I learned from my very first mentor, my past business partner, they all said to me, you need to know your finances.
Even if you do have someone else reconciling for you. There needs to be some sort of time aside in your business where you’re still looking at these numbers.
Tim Hyde Snippet (00:23):
And this is why we have to have some measure of control and least understanding about our finances. There’s a couple of things there that we really need to track one of obviously is our financial numbers.
But also there’s a second set of numbers if we manage our market against sales numbers, that’s what drives the profitability of our business.
Samantha Riley Intro (00:38):
Welcome to the Influence By Design Podcast. I’m Samantha Riley, authority positioning strategist for coaches and experts. If you’re ready to build a business that gives you more than just a caffeine addiction, and you dream of making more money, having more time, and having the freedom to be living your best life, then you’re in the right place, it’s time to level up.
Welcome to today’s episode of influence by design. I’m your Thursday co host Samantha Riley, joined by the I was gonna say the dapper Tim Hyde but I don’t know that you’re looking at dapper you’re looking rubbed up I ever wrote up by the write up Tim.
Tim Hyde (01:21):
I’ve got a call got a head cold at the moment that you know nondescript via you know, virus that makes you feel horrible and cough and splutter eating runny nose and, and all that sort of stuff and makes you sound like you’ve got a, you know, croquis Six Line voice or something like that?
Samantha Riley (01:38):
Oh, Z Yeah. Well, thank you for joining us
Tim Hyde (01:41):
children on blaming those virus creating machines, you know, children,
Samantha Riley (01:46):
they do, right, they really do. Well, let’s get this one knocked out the past. So you can wrap yourself up in a warm blanket for the rest of the afternoon and plenty. Today, we’re going to be talking about understanding your numbers, which numbers you need to pay attention to, because I think a lot of people say you know, you need to know your numbers.
And that sounds really great. But you may as well say that in Japanese, if you don’t know what numbers you need to know, right? It’s just one of
Tim Hyde (02:16):
Those generic sort of throw out these terms. You need to know what your numbers are. Okay. What what numbers, numbers should I know and that sort of stuff. I recognize things in business seminars is that, you know, fundamentally, we’re running a financial operation.
And it scares me, I must admit, it really scares me when I come across business owners who do not have a fundamental understanding of what their business is doing financially, and have some measure of control over that.
Samantha Riley (02:48):
And that very last little piece that you said, actually gives me a pang of anxiety. So let’s not go there. Let’s get clarity. We’re not going to go super deep today.
But we are going to talk about the kinds of numbers that you do need to know and that you do need to be, I guess, recording and paying attention to because as Peter Drucker said, what gets measured gets managed.
And that means that if we don’t know what’s happening, we can’t improve on that. Look at you with your quotes. Well, you know, I learned from this guy called Tim high that pulls out quotes at the drop of a house like, Yeah, let’s just pull out a quote.
Tim Hyde (03:32):
I don’t know, I don’t know how they got in there. But they’re pretty good. Yeah, I think that’s the thing. Right? You know, again, as I mentioned, running a business is largely running a financial operation.
And if that’s not steed will invest, not manage will, what you’re going to find yourself is in a whole world of hurt and pain. And let me tell you, if you haven’t done it yet, getting to that point, the night before payroll is due and not having enough money in your bank account to pay payroll is one of the worst feelings in the world.
Samantha Riley (04:03):
I’ve been there. And it is not nice.
Tim Hyde (04:07):
Yeah. And this is why we have to have some measure of control and least understanding about our finances. Okay, I’d be running in business is a financial enterprise. It’s an operation that allows you to pay you as the business owner, what it is you need to know.
And I think there’s a couple of things there that we really need to track. One of obviously, is our financial numbers. Right? Are we making a profit? Where’s all the money going to etc? Where’s it coming from?
But also, I think there’s a second set of numbers that, you know, just echoing Peters wise words, if we manage our market, again, sales numbers won’t have we measure those we manage those, and that’s what drives the profitability of our business.
Samantha Riley (04:50):
Absolutely. So you just mentioned you know, knowing your financial numbers, you know, what’s coming in, what’s going out, where are you spending, I think think is really important. And we’re not going to dive into this super deep.
But just as a basis, I think it’s really important to have some sort of financial software so that you can pay attention to this. I don’t know what you use Tim, but we use Xero in our business, and we’re a zero
Tim Hyde (05:15):
shop as well, I know QuickBooks is super popular in the US as well. Having that platform allows you to put things into buckets, or just put things into different buckets, it gets very confusing, but it does mean you can start to look at your phone bill every single month, and go well is my phone door going up or down.
If I find those going way up, and my revenues not going up, or maybe what’s happening, I think one of the biggest ones, Sam, and I know, your bank account must be absolutely crazy with the number of staff that you’ve got and transactions that she made.
We’re having a conversation about stripe, chargebacks and all sorts of stuff. But you know, you very quickly get to get beyond five or 10 transactions a month in your bank account, right?
Samantha Riley (05:56):
Oh, my goodness, we’ve got hundreds, under your link gonna
Tim Hyde (05:59):
be literally in the hundreds of transactions per month and try to manage that off your your bank statement. Not a good idea, not easy to do, very quickly find that you’ve got transactions that you’re spending, maybe for subscriptions that you’re not using, or you’ll have a chargeback from clients you didn’t realize, or you know, all those sorts of things.
And financial software is set up, like QuickBooks and Xero is set up for you to manage, oh, my god, I can’t be level left at my job, all those miles, fuming at me FreshBooks, whatever this financial software that he’s using, allows you to put those transactions into buckets quickly and easily.
And I mean, they’re really cool there because there’s so much AI involved with them as well. If you’ve coded something against, you know, a subscription or an account previously, it’s very easy for you to look at and go, that goes there that goes there that gives you a lot more control. Yeah, totally what it is you’re spending.
Samantha Riley (06:57):
Now I just want to say something here, because I often talk about on this podcast with my clients about not doing work that’s not in your zone of genius. And you know, delegating This is actually one part of our business that a I don’t believe is in my zone of genius, and b I don’t delegate.
So this is one area that I actually go against what I talk about, the reason I reconcile my own accounts is because I want to be able to follow at all times what’s going on. And I think that being the driver of my business, I need to know this information.
And it is one area that I learned from my very first mentor, my past business partner, they all said to me, you need to know your finances. So they all drilled into me right from day one.
This is probably something that even if you do have someone else reconciling for you, there needs to be some sort of time aside in your business where you’re still looking at these numbers, you do need to know them do not delegate this area of your business so much that you don’t know what’s going on, it can be a very dangerous place to be. Yeah,
Tim Hyde (08:04):
how often do you look at yours,
Samantha Riley (08:06):
her almost every day, you reconcile weekly, but I will look. And again, this is something my accountant said to me a few years ago, is you should be able to tell me what’s in your account on a daily basis. And from that point, it is something that I’ve always done. Because I don’t know about you, Tim, but I don’t like having nasty surprises,
Tim Hyde (08:26):
though this thing, right? Everyone did to the tax department or the IRS sort of breathing down your neck and saying no, what were these transactions for? Right? Because ultimately, you’re responsible.
And you know, when you run a business, you are the ultimate person who’s responsible for that particular sort of business. And not knowing, you know, engagement will have hurt and will have pain, I actually reconcile my accounts probably every two to three days. Now.
The lesson for me in that was probably from a couple years ago, and I did outsource it to a bookkeeper. And I will do that again. But my bookkeeper handed off to one of her junior staff, and the accounts weren’t getting reconciled.
They’re probably reconciled every 45 days. And most of the transactions are fine. But every so often, then we come back with a transaction saying, Well, what’s this? Gold transactional?
It’s got no idea what I spent that on. Yeah, yeah. And no clue at all. And when as soon as you get into that position, you have to be aware that as an owner drawing, you can’t put that against your business because that’s exactly right. Right out of his underdrawing. Well, beans,
Samantha Riley (09:30):
all the tax benefits are all gone. We’re all gone.
Tim Hyde (09:33):
Right for something that you don’t even know what it is. And I think that can get you know, when you’re sort of reconciling regularly, and having that financial conversation with your accountant or with your business coach, or whoever is doing that you can start to say well, this is how you could be managing your money better to make more money from your business.
Okay, we can’t get away from the fact that a business is there is a vehicle to create profit for our lifestyle. It’s not just there for us to turn up to work and not make any money.
Samantha Riley (10:06):
Yeah, exactly. So that’s really the foundation’s. That’s not what we’re going to talk about. In this episode, we’re going to talk about the basic numbers you need to be paying attention to in your sales pipeline. I think the first thing and funny I can’t believe I didn’t even put this on the list, Tim, because the first thing that we should be really paying attention to are our opt ins, or you know, our original people that are coming into our world.
So for the marketing that we’re putting out in the world, who is opting into our database? Or if you are a different business that doesn’t follow those? How do people very first come into your world?
Tim Hyde (10:45):
Yeah. All right, agree with that. I think there’s, there’s lots of vanity metrics in social media, particularly slumber engagements, number of shares, likes, comments, etc, etc, etc. But let’s not forget the goal of that initial sort of awareness marketing is to get people to do our thing.
And the thing we want them to do is to raise their hand, if it’s a billboard on the side of the highway, right? It’s an awareness tool to get people to do something, just call the number of visits with whatever it happens to be Thank you, dog. Yes, is to do something, okay.
And that is to get people to raise their hand. And in digital marketing parlance, that raise their hand is to opt in for a thing that you are offering them. And that’s probably one of the first important most important metrics, how much money do I spend to get that opt in?
Samantha Riley (11:35):
Yep. So that’s the first thing. Second thing is appointments or calls booked, or whatever that part next part of your sales cycle or marketing cycle looks like pipeline? How have you going to say it? How many people are going from I’ve raised my hand to now I’m going to have a conversation with you.
Tim Hyde (11:53):
I agree with this one as well. And this is the strength of your email marketing your than your nurture process. When someone says I’m interested, or I’m curious, what are the first one, how many people are actually prepared to actually take that next step to go I’m serious about getting this problem that I have your headshots are you
Samantha Riley (12:10):
totally. Now once we’ve got those people booked, we need to pay attention, or we need to record what the show up rates are. I would love to say that 100% of the people that book calls with me turn up.
But unfortunately, that isn’t the case. So we need to put things in place to make sure that the people that show up is as high as or as close as possible to the people that book so we need to record our show up rates. Because if we see these taking a dip, then we know that something needs to change in our pipeline.
Tim Hyde (12:40):
The next one after that, for me is conversion rates. Now, if you for a moment think that you are closing 90%, or more of the leads that come in, are you please share a secret? And then B shows the numbers?
Samantha Riley (12:54):
Yeah, yeah. Numbers, the actual
Tim Hyde (12:57):
numbers, because it’s easily close 100% of people who buy from you. Okay, it’s not easy to close 100% of people who actually, you know, had touch base with because it’s not, you know, that’s not realistic. Even good salespeople rent who highly skilled are only going to close it 30 to 40%. Ahead.
Now, it’s the job of marketing to get people as warm as possible before they get to your sales process, so that you can have the best chance of closing them. But let’s be realistic, just because they got to that point doesn’t mean they’re the right fit. In saying no to a couple of those people, when you’re at 90%,
Samantha Riley (13:32):
what needs to be a right fit both ways. Right? It may not be a right fit for them to work with you. But it also may not be the right fit for you to work with them. Yeah,
Tim Hyde (13:41):
absolutely. Absolutely. So conversion rate, again, something we need to measure, so that we know what you know what numbers are around that and go like every time I get someone opt in, you know, what’s the chance of getting to this point, so that I can actually make money, I’m gonna get an estimate of what is what takes us onto the next one, average customer value may occur.
Now we will have a conversation offline Sam about what would you spend to wire quite a clot?
Samantha Riley (14:10):
Well, this really depends on what it is that I’m selling, because if I’m selling in $97 program, my cost, I don’t really want to spend $150 to acquire them. I also know it’s not reasonable to spend 25 cents to acquire them. So this is something that you need to be really, really careful about.
And you and I were talking because, you know if let’s just say for example, you’ve got a $50,000 program, how much would you spend to acquire that client? Now if you say $10, I’m going to say good luck to you first start, but it wouldn’t be out of the realm of possibility for spending 300 400 $500 even $1,000 to acquire a customer who was going to spend $50,000 with you?
Tim Hyde (14:58):
Yeah, I think this is where we You need to kind of really understand a calculated metric as well, which is cost of acquisition. What does it mean? Just what an average customer value is? What does it cost to acquire them? What does it cost to deliver that customer? What does it cost to run a business?
And how much profit do we make? I think for me, if I was to look at this, I would be happy to spend all of my cost of acquisition. And all of my profit, would just about all of my profit to acquire a customer. But I’d be very cautious about spending more than those three numbers, knowing that I could potentially make more money from that person down the track.
But I certainly want to, but one is spending more than one cost me to deliver to that customer, I wouldn’t want to spend more than what it really is what it costs me to run my business in the process that we bring to that customer as well. We need to be really careful and understanding those buckets of where it is. And this is where your financial software can help your head.
What does it cost you to run your business every month? That much? Alright, divide that by the number of customers you have. Okay. But you know, at a very basic level of you think about those four buckets, cost of acquiring them. And that’s your time as well. All right, don’t forget this has a cost attached?
What does it cost for you deliver it, and that’s time and all resources. If you’re running a course, and starting, cost of delivery is lower? If you’re doing consulting and workshops, your cost of delivery is higher. Right? Sam, I know you’ve got a couple of new coaches in your team.
Right? It’s not you, those coaches have a cost to deliver that program. Okay, you’ve got all your back end staff, all your subscriptions, your management, your insurances, etc, that costs you money to run, and then you’ve got the bit that you get to take out, which is your profit.
So understanding those buckets, allows us to make really informed decisions about what we’re prepared to spend to get that customer into the business in the first place, in order to deliver the profit that we want to create from them.
Samantha Riley (16:53):
Totally. Now, we talked before about using financial software to pay attention to everything. But I record and I’m interested to hear how you do this, Tim, I just record these numbers, actually in a Google Sheet, my my calls, books, just a Google sheet, I don’t have anything fancy, I don’t even know if there is anything fancy available. I’m sure there is somewhere, but I just want to see the numbers. I’m just happy with the Google Sheets and just seeing the numbers there. There are fancy
Tim Hyde (17:20):
things you can do. And certainly, you can do a lot of automation passing data back and forth between systems. Right, you know, this is my space. We do this occasionally for clients.
But I think there’s actually real benefit, you know, having that scorecard in an Excel or a Google sheet that talks about what what was my revenue this week, or how many leads to lead generate this week, because obviously your leads going up or down? Well, that you know, has a a lead indicator for potentially future revenue. You know, you see your lead dropping from 50 to 40 to 30 to 20.
Right, at some point down the track, you will see a dip in revenue as well. tidally, whatever the loss being the same will hurt you if you’re tracking your conversion rate each week and your average deal size. Okay, well, you know, you’ll see, if I see my conversion rate dropping down, well, I’m gonna see next week, and we’ll see cash collected, starting to drop, well, if you see it go the other way cash collected should be going up.
And if it’s not, there’s something else at play. Right. So I actually think there’s real benefit in using a Google Excel spreadsheet, and manually going to look at those data to put into that spreadsheet on a regular basis. I don’t think just manually
Samantha Riley (18:31):
manually looking but manually entering it gives you some sort of accountability. There’s just something about having to put the number in yourself gives you accountability to what these numbers are.
Tim Hyde (18:42):
Yeah, it’s good. And I don’t you do it to them. I know you report it to some of your team, and you only talk about it. But I actually report that back to my team each week, every every team meeting, we have to go this is where we’re at time.
Samantha Riley (18:55):
Yeah, nice. We don’t at this point. I don’t know whether that will change in the future. I think that’s very, very personal. I know that in past businesses I have, and depending on your team, it can work in your favor or not. At the moment, we don’t but like I said, I don’t know whether we will in the future.
Tim Hyde (19:13):
Yeah, that’s a few extra metrics. But I’m curious now, if you had to pick four or five. And to get people started, if you’re not doing yet, what would be your five metrics that you would track? Every week?
Samantha Riley (19:25):
Every week? It would be calls booked? Definitely it would be conversion rate, definitely. It would be average spend, definitely which we actually did. Yeah, that your average customer value average spend, I mean, they would be my three and probably their lifetime value as well.
So you know, are we taking $5,000 for six weeks? Or are we taking $1,000 a month for you know, and they’re likely to stay with the program for three years. That’ll make a big difference on what my marketing spend could be. I’m interested in yours.
Tim Hyde (19:59):
You FMA I would probably add opt ins, maybe because opt ins to me a an indication of what I’m doing. If I’m doing stuff and not getting opt ins, I’m doing the wrong stuff. Yep.
First and first and foremost, okay, if I’m not getting people to raise their hand, my content, or what I’m putting out there into the market is not the right content. 100% That’s my first one number of appointments, I would do number of sort of pictures or, you know, presentations is probably another one that I would do.
And that’s the only thing I can extrapolate sharp rate from that. And then the other one I would do is top line cash collected. Now, obviously, I can get average customer value and cost of acquisition from that. But it’s cash collected from 100%.
Samantha Riley (20:46):
I mean, at the end of the day, like you said, it’s almost the only thing that matters, because that is why we’re running our business is to get that cash in the bank.
Tim Hyde (20:55):
Yeah, I’ve done this with a couple of customers as well. Again, just having a really clear idea of what do I need to make permanent minimum per week, or per month, whatever the number is to run my business and make a profit.
And just having that number stuck somewhere in your business and get run, create a six month average, right? Because we know it goes up and down month to month, but work out what it costs you to run your business and then put that number somewhere and look at it every single day. I guarantee you again, what gets measured, gets managed, and you’ll draw.
Absolutely, guys, thanks for joining us for today’s episode, lots of absolute bombshells Santhi was sharing some of the insights in what you measure in your business. We’d love to hear from you the listener, what you measure if you measure how often you measure, and maybe even financial software or tips and tricks that you use in your business as well, maybe we can share that in a future episode.
Sam awesome conversation again today. And as always wonderful to share the microphone with you.
Samantha Riley Outro (21:51):
Thanks for joining me for this episode of the Influence By Design podcast. If you want more head over to influencebydesignpodcast.com for the show notes and links to today’s gifts and sponsors. And if you’re looking to connect with other experts who are growing and scaling their business to join us in the coaches, thought leaders, and changemakers community on Facebook, the links are waiting for you over at influencebydesignpodcast.com