“Entrepreneurship” is often perceived as a case of an entrepreneur coming up with an idea and then executing it in flawless fashion. In this fantasy, the “detail” or the admin is left up to the support team…. I would argue that this is as far from the truth as they come and you need to have a deliberate data strategy if you want to give your business the best chance of success.
“I don’t have time to look at the data”
There is a saying that entrepreneurs often dedicate too much time working in – rather than on – their businesses. This is where the data elements of your business become increasingly important.
If you are constantly busy with low value or low return activities, then you won’t know where to dedicate your time and financial resources.
Let’s take a look at a couple of practical examples here:
A website is normally a pretty key component to giving your business an online presence and attracting new potential clients. Yet how much do you actually know about your website and the user habits?
Irrespective of whether you are spending R100/month or R10 000/month on your website, you have incurred a cost building and maintaining it.
- How do you know that the developer actually did a credible job on the site?
- Do you know whether people actually visit your site?
- Do you know how they get there?
Simple tools like Google Analytics and GTMetrix will help you make more informed decisions around your website investment and let you take strategic decisions quickly.
At the end of the day, your customer base is your best asset for your business and yet so many small businesses have no central repository for this information. Too often this information sits in the heads of the entrepreneur or a sales person who then leaves and walks off with one of your key assets.
How much money do you invest in your sales force each month? How effective are they? How regularly are you talking to your clients?
A Customer Relationship Management (CRM) system helps you to keep client contact details in place and helps you maintain a regular log of previous communication you had with them.
Let’s use a practical example: If your are not meeting your sales targets, how do you decide how to respond?
Are you making 5 phone calls a week or 50 phone calls a week?
- If the answer was 5, the argument could be made that you need to increase your sales volume to increase your number of sales. This will give you a metric that can be monitored
- If you are making 50 sales calls a week then your positioning or “pitch” might be wrong
You can’t answer this if you don’t have hard data to back it up and this is where a CRM can be incredibly powerful.
Can you visualize who your customers are, how many of them there are and how deeply you have penetrated the market? Often when we start our Problem-Solving sessions for entrepreneurs, we ask them to name 5 customers they really want to secure in the next 6 months.
It’s amazing how often they either battle to name 5 potential customers or are unable to drill into who they want to be talking to (name or job title). Ironically if you ask them to present you with a business plan, they can point out how “everybody in industry x” is a client.
We regularly see business plans where the entrepreneur has no real idea of the number of potential clients in their market. They then chase impossible sales targets / market penetration.
Write down the targets and research them religiously so you know who you are looking to approach and best methods for approaching them. Again a CRM can be a great tool for identifying trends and storing potential information about the potential client / feedback.
Without data, you don’t know where to aim your business.
Your mailing list
Each person you interact with in your business, is a potential client or a source for potential clients and yet we rarely spend time investing in our mailing list. It’s often more interesting to spend time on social media – shouting into the ether – than actively investing in your mailing list and measuring how customers respond to how you communicate with them.
Many entrepreneurs hide behind e-mail as their sales tool, randomly shooting off e-mails to potential prospects without ever interrogating whether the e-mail reached the right person and whether they found it useful or not.
A well curated mailing list run through a tool like Mailchimp can tell you:
- Who opened your e-mail / forwarded it to other contacts (IE level of interest)
- Who interacted with it the most – IE how many times they clicked on URLs in the mail (useful if you want to schedule follow-up phone calls)
- What did they click on? (Great if you want to improve your positioning / open rate)
The cost of meetings:
Arguably this should be handled under the finances sub-header but it is a personal grudge point for me at the moment. If you think big corporates hold a lot of “meetings” then start to measure the cost of meetings on your small business.
I actually measured the cost of these coffee “meetings” this year after I hit my 40thone in 6 months. These meetings roughly cost me R8000 in petrol / Uber / coffee and the net return on them … not a cent. Now I could simply be really bad at coffee but I have found it far more useful to ask for:
- An agenda for the meeting
- What are the expectations from both sides
- Stated outcomes – “Picking your brain” is not a good stated outcome
I broke my own rule this week and went for coffee without asking the above questions – I thought I knew the purpose of meeting – and it turned out to be a query around coming to work for one of my partners and could I assist the person with a foot in the door.
Your time is your most valuable commodity in your business. The time spent doing coffee is time you’re not investing in your own business.
Find a system for assigning yourself strategic and operational tasks and interrogate this system at the end of each week to find out where you’re actually spending your time.
SME Snapshot and Yue Diligence
Two tools that you might want to consider for your business to help you better dashboard your activities are SME Snapshot and Yue Diligence.
- SME Snapshot keeps all your critical data in one place and helps you benchmark against peers as well as manage important deadlines like tax.
- Yue Diligence, we have previously mentioned but it’s a tool which helps you handle the “Due Diligence” side of your business, particularly if you are planning to scale up and present to investors.
Depending on your personality, I either saved the best … or the most boring for last.
So many small businesses see their financials as “admin” and if they don’t have a dedicated financial resource, they tend to put it off until they absolutely have no choice but to catch it up.
Change your mindset around your financials – they’re your dashboard for where to point the business and to navigate risks.
- December / January is about to roll around – for many entrepreneurs, this is a poor time for trading and many clients go on holiday and forget to settle their outstanding bills. Will you need to make use of a debtor finance facility to get you over this period so you don’t have staff with pitchforks at your gate over December?
- Are you underspending on marketing and sales efforts? When the money is tight, the natural inclination is to cut marketing and sales efforts which could force your business into a death spiral. Identify this lever and measure how you can best apply it to your business
- Do you know what your true cost of sale is from sourcing your product through to delivery to your customer? A very good example is the “silent” impact of the petrol price which is impacting delivery through the supply chain. Have you actually calculated what the impact of the petrol price has been on your suppliers and what they are passing on to you?
- Are your product lines impacted by currency fluctuations and do you respond accordingly? The Rand is one of the most volatile currencies around and could easily impact your product margins by 10 – 15% in a very short space of time – are you monitoring this?
My view is that there are really only two sums that an entrepreneur needs to know:
- Buy for R1 and sell for R2 = you’re in business
The first one is pretty simple to understand – you’re not in business because you tell people you are. You’re in business when you add value to a product and successfully sell it.
The second one is a case of measuring time vs. money. In a start-up, you spend a lot of time trying to make a little bit of money. Your goal should be to improve the amount of money you make using the least of your time. If you can measure time and money, you give yourself an enormous head-start.
Get the systems in place and start working on rather than in your business.