There are some critical numbers that people in business need to be aware of but most people are not. Business is all about numbers and how they relate to the activities that we generate.
For those of you who have attended my GBC, you would know these numbers and how they make a massive difference to the way you operate your business and the long term results you get out of it.
So here goes:
- 88% of business failure is due to things that we as business owners can control.
Wow, so basically 9 out of 10 business failures we potentially could have stopped or done something about. To further make it even more interesting 32.1% of the 88% is due to poor management of financial activities. What do we mean by poor management of financial activities. This includes – lack of funding, not doing the paperwork, lack of reporting systems to measure relevant indicators, unable to manage cash flow just to name a few.
- Over 50% of businesses have no strategic business plan and interestingly 50% will change hands in the next decade.
Therefore people in business are not planning and they are just hoping that things will happen and success will come. As we know outcomes come from actions taken from decisions that have been made. To make a decision and take action you must know where you are trying to get to. Otherwise as they say if you aim at nothing you will hit it with amazing accuracy, every time. How true is that.
- It costs 6 times more to get a new customer to deal with us than what it takes to get an existing customer to buy more from us.
Why is that so people ask. The reason is that to get new customers to deal with you you have to chase them and promote to them and potentially wine and dine them. Existing customers already know you because you have a relationship and they trust you and love working with you. Provided that you are giving them awesome customer service and you are doing all you can to help them get to where they want to get to.
- A 15% increase in customer loyalty can increase profitability by up to 80%.
Once again this has to do with the relationship and if we take care of customers they will stay with us longer. That means that if we can focus on lifetime value of a customer our profits over the longer term will go up. As we do not need to constantly spend more money and time trying to get new clients.
- A fully systemised business is worth up to more than 86.7% more than an unsystemised business.
The reason for this is that people can buy a business that is a system and they can walk in there and things will work. That is why businesses like McDonalds are worth so much more than normal fast food outlets.
- The cost of employee turnover is up to 150% of their remuneration package.
The reason for this is that you drop time interviewing, training, bringing them into your culture, then working out that they are not working out and then having to go through the process of them exiting the business. This all takes up so much time and is so expensive to your business. Employing people is such a critical thing in any business and you should try to implement systems to make the process better and reduce the risk of the wrong employee. But even the best thought out plans at times will not help you from the wrong employee. At times they will slip through the cracks and get into your business. All you can do is plan and try to work through a process to reduce the likelihood of that occurring.
- 80% – 90% of the success of any business ad, letter or communication comes from the heading.
The heading is the first thing that people see. If it catches them they will read further if it does not you have lost them. One of the really neat things you could try in your business is a split run test on headings with the same body. You will be amazed at some headings for one reason or another have dramatic response rates. So the secret is – test and measure everything including headings.
Above are just some of the key numbers that people in business should know but do not know. These are so important that just by thinking about them you can actually start planning how you can do something about them.
It is all in the numbers.
If you or someone you know could benefit from understanding the numbers in their business, I’m here to help!