One of the problems with running a small business is that it's hard to know if you're winning or losing in the daily struggle to take your business to the next level.
Unlike the CEO of a publicly traded company, there's no stock exchange to tell you if your company is worth more today than it was yesterday. Even benchmarks like sales and profits can be elusive when you're not sure when your customers will pay or how long your inventory will sit on your shelves.
But, while it may be tough to gauge the financial progress of a small business on a daily or even quarterly basis, it's still important to set goals and monitor how close you come to meeting them. For example, if the dinner crowd seems a little thin at your restaurant tonight, you can blame it on the weather, the ball game or a number of other factors. But, if business doesn't pick up in another couple of weeks, that might indicate a more serious problem -- one that might require a menu change, a price cut or an even more drastic measure.
At Axxess, my small-business consulting firm, I keep score by tracking the number of sales leads that come in the door every month and how likely they are to close. A fat pipeline is a pretty accurate predictor of good times to come. A thin pipeline is a warning sign that tells me that I've got to get out and start pounding the pavement again.
Here's how I do it and how you can do it, too. Using an Excel spreadsheet, I track my prospects' name, company name and contact information in addition to the name of the service that I'm trying to sell and the estimated value of the sale. I divide my pipeline into months and color code it by the likelihood that the sale will close. Warm leads get coded pink, cold leads are coded blue, and leads that don't close by the end of the month are rolled over to the following month or, if I've given up on that prospect, simply deleted. Leads that close turn green--always a happy sight!
While I can't control how many sales I'll make in a given month, I've got a pretty good idea after eight years of running this business what percentage of the leads that come in will close. When you think about it, making sales is a numbers game and, as they say in the lotto biz, you've got to be in it to win it.