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The start of a new year is a great opportunity to take stock of what is and isn’t working in your business. As they say, the best predictor of our future is our past. So as you set growth targets for the coming months, it’s the perfect time to look at some key metrics that we’ve seen successful, growing businesses use on a regular basis to keep them rolling forward.
Knowing exactly how much potential value is sitting in your pipeline is one of the most important things to review on a regular basis. Keen managers look at this figure daily as it a fantastic overview of what opportunities are around, and it is a crucial reminder of what leads need following up. This is a quantifiable measure of your low hanging fruit and this is where your business acquisition efforts can reap the best rewards.
Fluctuations in this figure help you better understand future workloads, in turn helping you manage resource requirements. Knowing at a glance the value of opportunities in the pipeline, you are equipped to make smart choices around where to place your efforts, how to allocate time and how to manage your cashflow.
Understanding where your opportunities come from is also important. For example, the Roll pipeline tool also shows you at a glance the source of opportunities in your pipeline (word of mouth, Google organic, etc), providing you with insight over which sources you should focus your marketing efforts on.
Estimated month-end billings
We’ve seen too many businesses take the wait-and-see approach when it comes to month-end billings. They have a general idea of how much work is on the board each month, and they can see when their teams are more idle or busy than usual. But they don’t have an exact grasp on the amount to be invoiced until just before invoicing time. This potentially leaves you playing catch-up the following month.
It’s better to begin each month with a clear picture of what your break-even point is for the business, what your revenue target is, and plan accordingly. Ideally, your software will be able to show you how you are tracking and what you’re likely to invoice come end of month. Knowing how you’re tracking well ahead of time will help you decide which taps you need to turn on or off, which opportunities you need to pursue or which projects you need to focus on to complete.
The more you monitor this one, the more you can do about it if things aren’t looking good come month end and the fewer problems you will have to face.
Total work in progress
As well as looking at your estimated month-end revenue, at Roll we’re strong advocates of having a very clear picture of the total value of work in progress (including projects that run over more than one month, where you use progress payments or instalments).
This is your business engine and like any other machinery, it needs consistent forward momentum – rather than stop and start actions – to maintain optimum efficiency.
You may instinctively know what a good level of work is for your resources and your cash flow. If this figure shifts significantly, you can use it to understand what is going to happen to your business. Work In Progress (WIP) decreased by 30%? You’re potentially going to be over resourced and have low invoicing in the months ahead. Work In Progress increased by 30%? You’re going to potentially be under resourced and need to recruit or you’ll have over worked and stress staff but also good invoicing coming up.
Again, this is another metric that puts you on the front foot, proactively controlling and monitoring workload will help you make the right decisions for your business and help keep you on track for profit.
Six-month revenue projections
Stating revenue projections for the rest of the year is often an issue business owners and managers cringe over. They often feel as though they’re arbitrarily pulling figures out of the air, and once they’ve stated them, they’re committed, with an added level of stress and worry.
While we haven’t yet created the Roll crystal ball, we have made it incredibly simple for you to create revenue projections for future months using what you have in your pipeline and work in progress. The logic for this is that you can view how the future is shaping up and get early indicators of big shifts in revenue which you can then plan for accordingly. Your accountant and bank manager will love you.
The above metrics are really simple, yet when you combine them, they’re incredibly powerful when it comes to planning for the future. They provide comprehensive visibility over your business as a whole and allow you to make sound decisions based on real-time data before it’s too late to resolve issues.
Want to examine how easily these metrics work in more detail?