Emily Kristofferson

Metrics That Matter in Your Business

As a student, my favourite subject was always math. I love numbers! And actually my 10-year-old’s teacher told me that he is “brilliant” at math. It runs in the family.

Many entrepreneurs don’t love numbers. But numbers are important to creating a consistent income in your online business. You definitely need to know your revenue, expenses and profit.

Obviously, revenue is key to creating income, but I want to go a little deeper than that.

Revenue

You want to be tracking your revenue, and I strongly suggest that you have income goals. Why? Well, you need to be focused on generating revenue. Remember – you are in business to make money – otherwise your business will not be sustainable. I’m talking about treating your business like a business.

I used to use a simple spreadsheet to track my revenue each and every day. It was to help me stay focused on that goal. It worked for a short time, but now I use a called YNAB, which stands for You Need a Budget. And when I first started using it, I entered in my revenue and expenses each day every day for thirty days straight to create a habit.

YNAB acts as an online version of the old envelope system some of our parents may have used. You create categories for expenses and plan how much you’ll spend in each category. When you have revenue coming in, you give each dollar a job – you assign it to an expense category. You can have categories for taxes, coaching or courses you’d like to take, other expenses you plan to make, etc. It’s super easy to use and I love the entire concept. It’s changed the way that I think about money and how I make financial decisions both in my business and in my life.

Number of Clients

This is another important number for creating consistent income in your online service-based business.

To create consistent income, you need to consider working with clients longer term – not just in one-off sessions. Now, I see this a lot with newer coaches – they may say something like $75 per session and maybe they offer a package of 3 sessions for $200.

I want to share with you what’s worked for me and for plenty of clients…

When I started my online business almost 6 years ago, I offered monthly retainers or blocks of time (starting at 10 hours to be used over sixty days.) All paid in advance.

By doing so, I knew pretty well how much income was coming in each month, which is what allowed me to leave my job. I was fully booked so I knew that if a client was to leave, it wouldn’t be an issue. It also gave me the ability to be more selective about whom I worked with.

I preferred to work with less clients for more hours. More billable hours meant more money. And this allowed my income to be very consistent.

However, without realizing it, I had created a time and money trap for myself. So, I decided to hire a coach for a VIP Day where we created my first signature program – The Launch Roadmap. You can see details about that program here.

Here are best practices for packaging your services:

  • Keep it simple! Easy to understand and clear for your prospects.
  • Know what problem your package or program will solve for your ideal client.
  • Decide on the top three results that you’ll work towards in the program or package.
  • Identify the primary and secondary benefits of the work you’ll do.
  • Play to your strengths by considering what you do better than others, what you enjoy, and the experience/expertise you bring.
  • Price by value and not by the amount of time.
  • Keep raising your rates (You don’t need to come out charging a premium price if you don’t have the experience or clout to back it up. I first charged $900, then $1500, and it’s up to $2800 currently and I’m going to raise it again.)

And how do you create consistent income with a package or program? Consistent marketing and getting good at sales. This ends the feast or famine cycle once and for all.

Expenses

So what about your expenses? We see so much talk and focus on revenue in the online space, but I’m sure you agree that bringing in lots of revenue doesn’t mean too much if it’s flowing right back out.

I could tell you so many stories of entrepreneurs who hit their revenue goals (you know, the 6-figures everyone seems to talk about), but were hardly bringing in more than what they would be make if they were working full-time at the McDonald’s down the street!

You need to be aware of your revenue numbers. But you also must know the extent of your expenses.

I recommend knowing both your necessities and your ideal number when it comes to expenses.

Why? You must pay your expenses, and you want to be super clear on what you’re spending money on. You want to know a base of how much revenue you need to generate to cover your necessities. Your ideal number can help to paint a picture of your ideal lifestyle.

You also need to get clear on where you spend your money.

Here’s where I’ve spent my money in my business:

  • Coaching – I need accountability and it helps me to talk over my business with another person who isn’t in it, but has done what I’m trying to create. The clarity and confidence that comes with working with a skilled coach is a good investment.
  • As my business has grown, I’ve needed support and a small team.
  • Business skills – For me, that’s meant learning the technical basics when I was started out and investing in copywriting skills to sell.
  • Technology tools – These don’t have to be expensive as there are many free or low cost options. They include domain registration, web hosting, my email marketing service, and a few tools that make my business (and life) a lot easier.

I make sure that I get a return on these investments. This is key! I look at most of my expenses as investments which allow me to build a profitable and sustainable business.

Leads and Sales Conversion

There are two more numbers that are essential to creating consistent income in your online service-based business. Your number of leads or interested prospects, and your conversion rate of those leads turning into paying clients or customers.

Do you know how many new prospects and new clients you are getting each month? If not, I’d suggest you start tracking that.

In order to secure private clients, you need to be having sales conversations or you might call these initial consultations.

By tracking and taking notes, you will be able to learn from your sales conversations, follow up and you’ll see patterns (like clarity around your ideal client and what language they use). You will also see your conversion rate, which is how many people you need to talk to vs. how many will sign up to work with you. Conversion would be the number of people who complete a certain transaction.

I keep a simple spreadsheet to do this. It includes their name, contact info, how they heard about me, the date and some notes. I learn every time that I have a conversation.

My conversion rate is super high and I will tell you why in this post.

When you see how many new prospects you are talking to and how many of those people you are converting to clients – you can use these numbers to identify areas of opportunities and possible solutions. Maybe you’re just not speaking with enough prospects, or maybe you need to develop your sales skills to convert at a higher percentage.

I always say that a successful entrepreneur must: Generate leads & Convert leads into sales. You need these two aspects of your business to work or your business risks failing.

You likely have heard that phrase, “What you focus on grows.” I encourage you to….

  • track your revenue
  • determine your necessity and ideal numbers for your expenses
  • track your number of new prospects and new clients

Regardless of where you are starting out, take action!

What other numbers are important to you in your business? Share in the comments below!

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