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Measure Your Business

Measure Your Business

Measure Your Business

Host:  Joel Goobich, Big Picture Advisors

Featured Topics:  Business Metrics, Business Analysis, Financial Ratios

Control of your business operations is essential to generating the profits and cash flow that will keep the ‘doors open’ and long term business growth. A well run operation provides the springboard for growth and extreme business success.

This episodes delves into how to measure your business. How to create, monitor and use business metrics. Having systems in place to monitor and calibrate operations in each operational area is how you build a strong business core.

The classic adage “If you can’t measure it you can’t improve it” may be cliche’d – but like most truism – it stands the test of time. Make sure you use the correct business ‘yardsticks’. You might be missing important data because you are using the wrong measurement tools.

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Terms/Concepts

Business Metrics, Financial Ratios, Business Analysis,  Business growth, Cost to Acquire Customers, Lifetime Value of a Customer, Churn Rate

The Big Picture (Episode Feature) Question

Are you really measuring the correct metrics of your business? Business metrics are like the telltales that indicate where your business is sailing to. Make sure you know how to read the winds correctly.

Host Information

Joel Goobich, President
Big Picture Advisors llc
www.bigpictureadvisors.com
843.216.2493
Joel@bigpictureadvisors.com

Tip/Offer of the Week

Most business owner focus on growing revenue.  This is the holy grail of business metrics. Almost every business focuses on profit and loss. And of course they should, but this weeks tip of the week is to use some other financial and performance measurements that can provide earlier warning signs of trouble—or early indications of longer-term success.

Here are four metrics your business really should not ignore

Cost to Acquire Customers (CAC). Also known as customer acquisition cost, this measures the cost of landing a customer

Lifetime Value of a Customer (LTV). Unless your business is truly one-off, some percentage of customers will become repeat customers. The more repeat customers you have, and the more those customers spend, the higher CAC you can afford

Churn rate. Every business gains and loses customers; that’s a fact of business life. But still, lost customers are like failed investments. You spent money to acquire them, service them, and try to retain them… and now they’re gone.

A rising churn rate could be caused by a number of factors: Dissatisfaction with your products and services, new competition in your market, or even the coming end of a product or service cycle.

Churn rate is a solid indicator of rising CAC and lower LTV. In fact, all three are great leading indicators of problems—or successes—to come, both in other metrics and for your business overall.

Revenue percentages. Very few businesses only have one source of revenue. Most have multiple sources, and changes in the contribution percentage each makes can indicate problems are ahead.

Thought Exercises

1.  Write down what key metrics (measurement techniques) you use to determine if you are meeting your objectives.

2. Write down how you measure the effectiveness of your sales and marketing efforts.

3. Write down what success means to you. Have you told others in your company what it is? Is everyones measure of success the same?

4. Write down what  you think success means for all of your key employees.

Links

Top Ten Ways to Build Better Business Abs (Strengthen Your Business Core!)


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About the Host

Joel Goobich is a big-picture guy with sharp insight into how individual parts make a strong whole. He has 30+ years of entrepreneurial endeavors; starting, building and exiting businesses. He is tireless in the pursuit of solutions to boost your business and put you on a track to a profitable transition and exit to your next act.