4 Numbers Every Business Owner and CEO Should Know
Your Accountant really doesn’t do much except keep you out of trouble with the Gummit (Government) people.
Do you have any influence on the rules they follow for YOUR business? Can you (legally) direct their handling of the numbers?
Nope. The Gummit makes the rules. Maybe you have heard of them? GAAP (Generally Accepted Accounting Principles). You really don’t need most of the reports they generate, they are solely for taxation purposes. If there were no taxes, there would be little need for the entire department. Think about it. P&L’s could be done with a simple box in your office. You drop in the money for the day and reach in to take out money for bills. Although simplistic, this all you would really need.
What does your accountant do that helps the business grow? What does he do for YOU? Other than (hopefully) keeping the IRS out of your office, (and you out of jail) nothing. There are very few numbers your accountant generates or monitors that are then turned around and offered to you to increase sales or profits.
But you can train your accountant. Below are four equations that EVERY CEO or Business Owner must master.
Lifetime Value of Customer. This figure exposes the actual value, on average, of a single customer/client/patient. It can then be used to determine how much to spend getting new ones, be used when resolving a problem with a client. It can predict future income better than looking at the past (like your accountant does).
Cost per Lead. The most basic measure of the cost/investment of getting new people to buy your product or services. Few businesses even know this figure, which, taken alone, can be misleading.
Cost per Lead Sold. Once you know this figure, you have the basis for a marketing budget, cost of advertising, and can acquire new BETTER clients easier and faster than your competition. Leave the problem clients (discount seeking cheapo’s) to your competition!
Marketing Campaign ROI. Every campaign- let me repeat that- EVERY campaign must be measured to determine the Return-On-Investment (ROI) . Paying money to ‘brand’ your product or business is only for those with millions of dollars to waste, er, I mean, spend (Think Coke, WalMart, Pepsi, etc). There are simple tools you can implement today to measure whether your marketing is achieving positive results.
Stop Throwing Money Away. Do you feel you are throwing money away in your advertising and getting little or no results?
Maybe you’ve heard some of these famous marketing consultant “Sales Tactics” (aka LIES!):
- “You need to get your name out there.”
- “You have got to brand yourself” (This is a doosey)
- “I went to school for this, I am an expert” (So they have never ran a real business?)
- “You can’t expect results from just a single campaign.” (What a crock!)
- “We didn’t use enough different media. Next time we need a bigger budget.”
- “It’s the economy.” (I started and grew my business in this economy)
- And my favorite… “You need a bigger ad!”. Said famously by the Yellow Page reps.
Join me now and stop wasting your marketing dollars with poorly experienced ad people.