6 Steps to Financial Freedom for Businesses – Step 6October 5, 2023
Execute, Measure, and Modify
I only listed this final step because I wasn’t really aware I was doing it; I was kind of on autopilot because it just happened so naturally that I had never counted it as a step. We listed the Strategic Plan back in Step 2, but what good is a plan until you execute it?
Just Do It!
The Strategic Plan asked where you wanted to be as a company in 1 year, in 5 years, in 10 years, etc. There were measurable goals set, not just abstract ideas about how you want the company to be “better off” in the future. The Execute action of Step 6 is how you open the doors in the morning, do the work, and close up shop when the day is over. It’s the small actionable steps each individual team member takes every day. You can’t have successful big plans without the small steps it takes to get there. Every thousand-mile journey starts with a single step.
In Step 3, we spoke of Creating Operational Excellence. The blueprint was laid out, and executing is where the rubber meets the road.
It’s All in the Performance
One of the biggest weaknesses I see in small companies, not just in the HVAC industry, is failing to measure the basic units of business performance. Obviously, you’d want to measure your financial performance with your financial statements. You’ll want to measure revenue, gross margin, profitability, etc. The Measure action in Step 6 is for checking progress in all departments, but we must not ignore the importance of what keeps most businesses afloat – sales. If you want a successful business, it has to start with the nuts and bolts of sales performance.
Below are some of the basic metrics for measuring sales success. Modern statistics can sometimes drill down deeply into the numbers to find out which days of the week outperform others, what time of day is the most successful, and what color shirt to wear to make the best impression. I’m kidding about the last one, but for the sake of keeping it simple, we’ll just use the below metrics to kick things off.
- Total Leads – The total number of leads taken by a salesperson for the month so far.
- Number of Sales – The total number of leads a salesperson has converted to a sale.
- Closing Rate – Number of Sales divided by the Total Leads, shown as a percentage.
- Total Sales Revenue – The monetary total of all a salesperson’s sales for the month.
- Average Sales Revenue – Total Sales Revenue divided by Number of Sales.
- Revenue per Lead – Total Sales Revenue divided by number of Total Leads.
To show these numbers in a real-world example, I’ll use metrics from a real salesperson named Dave. Dave’s numbers may not appear typical because he has taken my advanced training and is now a top performer in his company. His numbers for the first week of the month are as follows.
He has taken 13 calls and has closed 8, for a 61.5% closing rate. He has brought in $63,018 in revenue from those 13 leads, which means he averages $4847 in revenue per lead. And for those of you not tracking revenue per lead, you really should be.
In other words, EVERY TIME the lead coordinator hands Dave a sales lead, whether he closes it or not, Dave brings back an average of $4,847. Every time he leaves the building with a sales lead! When he does convert it to a sale, that sale averages $7,877! Is this someone you’d like to give all your leads to?! Absolutely, except there’s a better way (besides cloning).
If Dave’s doing some things that the other guys aren’t doing, we’ve got to identify exactly what. Just like anything else, find somebody who has what you want and do what they do. And if you do what they do, you’ll get what they’ve got. It’s simple but not particularly easy.
Discover and Track Patterns
Your metrics should be reviewed regularly by management. Plan to hold monthly or quarterly sales goals meetings and inform everyone where the team’s progress currently stands. If an individual (or the whole team) is underperforming, this is the time to address taking additional training or reviewing the basics they were taught.
If you find everyone overperforming, talk about not letting the foot off the gas pedal and becoming complacent just because they’re ahead of projections. Incentivize with bonuses or some other way that lets them know it’s as much about them as it is the corporation/company.
Underperforming, overperforming, or hitting the target exactly; this is where you can make adjustments to the team or to the numbers. If you’ve been charged with managing the sales team, there’s more to it than just signing off on vacation requests. Your neck may be on the line, so it serves everyone well to pay close attention to the numbers and their meaning.
This is where you can shine. You are able to see these sales numbers from an eagle’s perspective because you have an overview of the entire team. Patterns will show themselves over time. For individuals and for the whole team. How is a salesperson performing month over month? Is anyone showing improvement every month? You will find more than one “aha” moment, I’m sure. The Modify action relates to how you take all this data and make changes to improve the numbers and chances for success.
This wraps up the 6 Steps to Financial Freedom for Business. Volumes could be written on the topic, but this was meant to be an overview of the steps. We cover much more on this and other topics to help grow your business in our online training.