Written by Dave Lavinsky on Friday, December 2, 2011
As you know, I do a lot of marketing.
I market via my website. I market via social networks like Facebook and Twitter. And I market via more traditional means like public relations and direct mail.
But when it comes to several of these marketing channels, there's one thing I NEVER market, and that's equity or securities.
You see, while you can market products or services pretty much anywhere, in the United States there are many laws the regulate the sale of securities, mainly the stock in your company that you may want to sell to individual or "angel" investors.
And specifically, these laws forbid "General Solicitation." Which means that you can't market your equity via Facebook, via Twitter, or via your website, and you can't stand outside of a Wal-Mart and ask passerby's to invest in your company.
So what should you do?
The answer is fairly simple - network.
You've probably heard of 6 degrees of separation. Six degrees of separation refers to the idea that everyone is on average approximately six steps away, by way of introduction, from any other person on Earth, so that a chain of, "a friend of a friend" statements can be made, on average, to connect any two people in six steps or fewer.
Now, I'm not saying that you should set your sights on Bill Gates or Donald Trump as an angel investor in your company and figure out the six or less connections you need to make to meet them.
But rather, there are literally millions of successful entrepreneurs and business people all around you with the means, interest and ability to fund your company. These are the folks you should be trying to meet.
You need to start by making a list of these individuals. But more important than just finding wealthy individuals to meet, create a list of people who could really help your business.
For example, is there a top person in your industry whose credibility and/or connections could help you?
Or is there someone you've come across who has amazing marketing or technical skills that would improve your company?
It inevitably turns out that these same people generally have the means to invest in your company. And, if not, they generally have vast networks of contacts they can refer you to who might invest.
When you find angel investors this way, you get what we call "smart money." That is, investors who not only give you the funding you need, but who provide the expertise, guidance and connections to make your company more successful.
In finding "smart money" angel investors, you'll need to think more like an executive recruiter or "headhunter" than a fundraiser. Importantly, the following are the five key skills and qualities of a great executive recruiter that you'll need to embody:
1. Identify the right candidates: a great recruiter can specify the ideal qualifications of and create a comprehensive list of potential candidates
2. Be outgoing: a great recruiter needs to get meetings with and speak with the right candidates; to do this, they can't be shy
3. Have good listening skills: a great recruiter needs to conduct interviews and really listen to the needs of their clients and candidates
4. Be well organized: a great recruiter needs to create a big list of candidates and methodically and repeatedly contact them until they get their desired results
5. Be persistent: a great recruiter follows up on great candidates; they don't let initial rejection deter them
To summarize, avoid mass marketing on the web when raising angel funding, and look for the "smart money" -- people that can help you both fund and grow your company. And act like an executive recruiter; in doing so, you'll be able to find tons of smart money angel investors for your business.
Suggested Resource: In Angel Funding Formula, you'll learn exactly how to find and contact angel investors, exactly what information to convey to them and how, and how to secure your financing check. This video explains more.
Written by Dave Lavinsky on Tuesday, November 29, 2011
When starting a business, most entrepreneurs dream about the finish line; specifically how their lives will be radically better once their business becomes a huge success.
But, soon after they start their businesses, entrepreneurs/business owners become trapped in the day-to-day, week-to-week, and month-to-month goals of generating more sales and profits, improving employee performance, and trying to reduce their hours and stress.
At some point, the vast majority of entrepreneurs become 100% focused on these short-term goals and lose sight of their long-term visions. As a result, they begin to wander, and never achieve the vision they initially hoped to achieve.
The solution is rather simple: you need to stop what you're doing and dream again about the finish line. Specifically, you need to reassess what it is that you're trying to accomplish with your business.
In many cases, this long-term vision will be the same as the long-term vision you had when you started your business. In other cases, your long-term vision might have changed.
But in EVERY case, you must reassess what your long-term vision is, or you'll have virtually no chance of achieving it.
And importantly, once you identify this vision, you need to reverse engineer it.
That's right, you need to fully imagine how your business will look once you have achieved your long-term vision, and then create the action plan for achieving it. For example, if your dream includes a company with 300 employees, you need to create the plan now for hiring and training these employees.
To help you achieve this, follow my step by step plan below for identifying your long-term vision and reverse engineering it.
1: Identify your long-term vision
- Write down what your ultimate goal is for your business.
For example, do you want to sell it to another company? Sell/give it to your employees or children? Take it public? Continue to run it forever and reap ongoing profits?
2: Identify your key end-game metrics
- By what date would you like your vision to be achieved?
- What will your company's annual revenues be at this date?
- How many customers will you have at this date?
- How many employees will you have at this date?
- On this date, what will your day to day responsibilities be?
- On this date, what will be your top selling products and/or services?
3: Reverse Engineer Success within the Key Functional Areas
Answer the following questions as if today was the future date in which you achieved your long-term vision and you were looking backwards.
- What marketing channels allowed you to attract/gain the most customers?
- What have you done to fully satisfy your customers?
- What business partnerships (if any) have you forged that have resulted in significant numbers of new clients?
- What have you done to develop your top selling products and/or services?
- Who are your key managers that motivate and manage your other employees? When did you find these key managers? Where did you find them? How did you develop them?
- When did you start ramping up your hiring process?
- What systems have you built to ensure your business runs smoothly and without your required day-to-day involvement?
- Who funded you along the way? How did you meet these funding sources?
4: Create Your Action Plans
Create action plans from your answers above.
For example, if you answered "direct mail" as your top marketing channel, document your direct mail strategy. For example, document who you will mail to, what your message will be, what your direct mail timeline will be, etc.
The exercise above is critical in ensuring your success.
The key is to not only dream about what your business looks like when it has achieved success, but to reverse engineer that dream. You need to think through how your business got to its successful state. And then work backwards in creating action plans that will get you there. And once you create these action plans, be sure that you and your team stay focused on executing them.
Written by Dave Lavinsky on Wednesday, November 23, 2011
I've been interviewed twice over the past couple of weeks about the recent Crowdfunding legislation that was recently introduced. And each time, I've found myself correcting the misinformation about it that the media has been spreading. So in this article, I'll give you the truth about what's going on, and how to leverage it.
Written by Dave Lavinsky on Sunday, November 20, 2011
A recent survey of business owners showed that 41.4% of businesses count on referrals for over 80% of their sales.
I actually don't believe this statistic; I think it's way too high.
But the statistic is very exciting. Because it means that these 41.4% of entrepreneurs are doing it right; because getting referrals is absolutely critical to your business' success.
Let me explain.
To begin, referrals generally don't cost you any money. So rather than spending $X to acquire the new client, you spend $0. This dramatically boosts your profitability.
Second, getting referrals boosts your average profit per client. For example, let's say your average profit per client is $50. Now, let's also assume that 20% of your clients refer you one additional client.
What that means is that for every 10 new clients you get, you actually receive 12 new clients (including the 2 referrals). Since each client gives you a profit of $50, you've generated $600 in profit from the 10 initial clients. So, your profit per new client goes from $50 ($500 divided by 10) to $60 ($600 divided by 10).
Yes, it's exciting that your profit has gone up 20%. But what's even more exciting is that you can use this increased profit to dominate your competitors. For instance, if your competitors are still only earning $50 profit per client, they can only spend up to $50 per client in marketing expenses. But since you're earning $60 profit per client, you can actually spend more than $50 in marketing to acquire a new client.
This allows you to advertise in more places and in places that your competitors can't afford. This will drive tons of new clients to you instead of your competition.
In summary, getting referrals can allow you to significantly boost revenues and profits, and allow you to dominate competitors.
Now, if referrals offer such a great benefit, why do 58.6% of entrepreneurs fail to effectively use them? The answer is that they haven't set up an effective referral system.
So here are the keys to an effective referral system.
Step 1: Make the Client Want to Give You a Referral
Clearly, your clients must be happy in order for them to give you a referral. So, make sure you satisfy their needs and fulfill the promises you made them when they purchased your product or service.
Step 2: Ask for the Referral
With a job well done, some clients will give you referrals on their own. But you'll dramatically increase the number of referrals you receive if you simply ask for them.
Of critical importance is to ask 1) at the right time, and 2) multiple times. With regards to the former, if a client needs to use your product/service in order to be satisfied, then you clearly can't ask for the referral immediately. Rather, you'll have to wait until they've used your product/service and can vouch for its success.
With regards to the latter, it is critical that you ask clients multiple times for referrals. You need to do this for several reasons. The first is that clients are often busy and if you ask at the wrong moment, they simply might not have time to give the referral.
Secondly, it's possible that today one of your clients does not have a new client they can refer to you. But maybe in a month they meet someone that would be a perfect fit for you company. But unless you ask for the referral again then, they'll probably forget to give it to you.
In asking clients for referrals, don't just ask them who they think might be a good fit for your product/service. Rather, it's more effective if you guide their thinking. For instance, you should ask, "I know you're a member of the XYZ organization; do you know anyone else in the XYZ organization that could benefit from our product/service?" This allows your client to focus their thinking in order to find more potential names for you.
Step 3: Effectively Contact the Referral
Clearly, once you receive the referral, you need to contact them and try to close the sale.
A key tip here is to ask the referral source to let the referral know you'll be contacting them. As such, rather than contacting the referral cold, you'll receive a warm introduction that will make the referral more likely to speak with you and buy your products/services.
Step 4: Putting it All Together
The key to a successful referral program is to formalize and systematize it. It shouldn't be something that one of your employees does once in a while. But rather, it should be a sequence of events that always happens.
For example, your system might include the following: Ten days after a sale is made your client gets an email requesting referrals. Fifteen days after a sale they receive a postcard. And then 28 days after the sale, your salesperson calls them to request referrals.
In addition to systematizing your referral program, you need to maintain statistics so you can see what's working and what's not working. For example, you should track each of your referral attempts and see which ones lead to new clients and which do not. And then you should tweak them (e.g., change your email to offer an incentive for the client to give you a referral), and track which tweaks work and which don't (and clearly keep using the ones that did work).
A quality referral program will increase your revenues and profits, and can give you real competitive advantage. So build your referral program today!
Suggested Resource: Growthink's Ultimate Marketing Plan Template allows you to quickly and expertly create your marketing plan; and exponentially increase your customers and revenues by developing your referral program and orchestrating the 5 key marketing levers. Click here to learn more.
Written by Dave Lavinsky on Friday, November 11, 2011
If you're looking for funding and/or to successfully grow your business, a little known secret is to find and leverage Advisors.
So, who or what are Advisors? Advisors are successful people that you respect and that agree to help your company. Advisors are generally successful and/or retired executives, business owners, service providers, professors, or others that could help your business.
Advisors generally will not cost you any money (you don't pay them), although I do recommend giving them stock options to incentivize them to contribute as much as possible.
Getting Advisors is not a requirement for raising money, but they have multiple benefits as follows:
1. Practice: if you can't successfully pitch an advisor to invest time in your business, then you're not going to successfully pitch anyone to invest money in your business. So, practice your pitch on prospective advisors first, and use that practice to perfect it.
2. Connections to capital: as successful individuals, advisors often have the ability to invest directly in your company; and/or they tend to have large, high quality networks of individuals they can introduce you to.
3. Credibility: having quality advisors gives your company instant credibility in the eyes of lenders and investors. For example, if you started a new hockey stick company, having Wayne Gretzky as an advisor would certainly give you great credibility (and connections). But even having much smaller names than Wayne Gretzky as advisors can build enormous credibility.
4. Operational success: In an interview I did with Dr. Basil Peters (a wonderfully successful entrepreneur, angel investor and VC), Dr. Peters said that mentors and advisors are an entrepreneur's "single most controllable success factor." Having Advisors with whom you can discuss key business matters as you grow your venture will help ensure you make the right decisions, particularly if they have encountered and dealt with the same challenges already in their careers.
I have seen these four benefits first-hand for my own companies and for companies that we've helped build their own boards. Click here if you'd like to see the list and bios of Growthink's Board of Advisors.
So, how do you build your Board of Advisors?
The steps are fairly simple:
1. Create a list of people you would like to be on your Board
2. Contact and meet with them
3. Secure the best Advisors you meet with
The final step is to hold formal and informal meetings with your Board members to leverage them -- to get them to fund your company or introduce you to other funding sources; to answer key challenges that you are facing, etc.
I must admit that years ago I wasn't thrilled about investing the time to go through the steps of creating a Board of Advisors. But I can assure you; those hours spent have yielded an enormous return on investment. In fact, I should have developed my Board much sooner than I did.
So, go out there and start building your Board of Advisors today. And start reaping the enormous benefits.
Suggested Resource: Want advisors? Want funding for your business? Then check out our Truth About Funding program to learn how you can gain advisors and access the 41 sources of funding available to entrepreneurs like you. Click here to learn more.
Written by Dave Lavinsky on Tuesday, November 8, 2011
Is your website as effective as it could be?
Even though I've probably never seen your website, I'm willing to answer the question for you. And my answer is that your website is not as effective as it could be.
How can I be so sure? Because I'd venture to say that every website on the planet could be improved in one way or another. It's a matter of identifying which attributes of the website should be modified, and testing whether a change in one or more of those attributes boosts performance.
So, what are the key attributes of a website that you should assess when trying to boost performance. Below are the 10 website aspects I consider most important.
1. Look and Feel
The look and feel of your website is much more important than most entrepreneurs realize. Specifically, when visitors come to your site, it's critical that their first impression is positive.
Importantly, think about who your customers are and what they are seeking. And then cater to them. For example, the look and feel of the Porsche.com website is extremely cool and elegant. Conversely, the look and feel of the Ben & Jerry's website (benjerry.com) is very fun and currently shows animated cows playing in a pasture.
Both websites do a great job of conveying the company image they want customers to have of them. Make sure that the look and feel of your website does the same.
The following situation happens to me far too often - I go to a company's website (either I found it online or someone emailed me a link). And then I read the homepage and don't know what the company does.
So, I find myself going to the "About Us" page to read more and to try to decipher what it is that the company does.
Importantly, I'm the exception. Few other visitors will invest the time to figure out what your company does. Rather, if they don't immediately "get it" and you don't immediately show them that you have or might have a solution to their needs, they'll hit the "Back" button and be gone forever.
A quick tip here is to use compelling headlines. For example, if your website sold tires, a great headline would be: "See Our Selection Of Over 500 Brands of Tires at the Guaranteed Lowest Prices." This is pretty much what all customers are looking for (selection and best price), so this headline lets visitors quickly know what the company does and that they are in the right place.
I'm sure your website has many pages, and it's your job to make it as simple as possible for your visitors to find the pages they want.
Navigation should be done on a top and/or left navigation bar, using links at the bottom of your website AND within the body text of all pages of your site.
I ran a Webinar last month using a new Webinar technology.
Shame on me that I didn't realize the new technology didn't work on ipads. So, many ipad owners emailed me that they couldn't access the Webinar.
The key lesson is that more and more, people are using devices other than computers (e.g., mobile phones, ipads) to access websites. Make sure your website is accessible from all of these devices or you will unwittingly be turning away new customers.
5. Quality Content
Website visitors have come to expect that your website will include quality content or information. For example, if your website has articles, they shouldn't be "fluff" - they need to include actionable advice that shows visitors that you know more than they do.
And clearly, having typos and grammatical errors will also turn off site visitors and prospective customers.
Think about the information you need to convey to customers to better solve their needs and differentiate you from the competition. While some of this information is compelling verbiage about your company, more of it should be information that's truly helpful to customers and makes them feel they made the right choice by visiting your website.
6. Amount of Content
The amount of content you include on your website is important for two reasons.
The first is that the more content you have on your website, the more preference search engines like Google will give your site when ranking it for desired keywords.
The second is that if customers are doing diligence on your company, they will want to learn more and more about you. Having a 5 or 10 page website clearly won't allow you to do this (you can start with a small website, but need a mechanism for adding to it).
Having a blog on your website helps solve both your website's need for amounts of content (#6) and interactivity (#7).
With regards to amount of content, adding a daily or weekly blog post entry will allow your website to constantly grow in size. This will boost your website's search rankings and give you more keyword opportunities to rank on (since each blog post might rank for certain keyword search terms).
With regards to interactivity, having a blog allows customers and prospective customers to interact with you. It gives you the opportunity to solicit feedback, which provides quick and easy market research.
Your blog also gives you a voice. Here's why this is important. People prefer to buy from people and not faceless companies. While your main website can have a professional, corporate look and feel, your blog gives your customers a look into your personality, and can encourage rapport and sales.
8. Proof that You are Great
Your website must prove that you are great, since many of your visitors may have never heard about you or your company, and there is a natural skepticism consumers have against companies they find online.
Unfortunately, overcoming this skepticism is not as easy as simply stating "we are great." Rather, you need to prove that you are great.
You can accomplish this by including any or all of the following on your website:
- Media mentions (in which media your company has been featured)
- Credibility logos (e.g., a logo of the Better Business Bureau with a link to your BBB rating)
- Client logos, names, testimonials and/or case studies showing you have performed quality work
- Industry associations and groups to which you belong
- Certifications you and/or members of your team hold
9. Have Multiple Calls to Action
Even though all of us have grown accustomed to going online to find new products and services to buy, the way each of us likes to buy is different.
Some of us like to buy online. Others like to fill out an online contact form. Others like to call a toll free number. And so on.
As the website's operator, it is your job to ensure that you have multiple ways in which visitors can contact you to learn more about buying your products or services.
Also, if customers may not be ready to buy now, include calls to action to download free reports or other items to satisfy their initial needs; these items should require them to give you their contact information for further marketing.
10. Effective Page Layout
The final key attribute of your website is the layout of your pages. The art of laying out your web pages properly is known as landing page optimization or LPO.
The key to LPO is making sure that visitors have to think as little as possible. The ideal layout influences visitors to take the desired actions. For example, if the goal of one of your web pages is to get the visitor to give you their email address, having the email box near the top of the page, with a clear headline above it in a big font, will yield much better results than the same email box on the bottom left corner of the page with a small headline.
There are several heat map programs that can show you exactly how your website visitors are interacting with your website; what they are looking at, what they are clicking on, etc. It is critical that you understand this information, and modify your page layouts over time to get more and more visitors to take the actions you desire.
I hope that from reading these 10 key website elements, you've identified ideas to improve your website. Importantly, you must understand that improving your website is an iterative process. You should always be testing new ideas, and tracking results. Doing this for even just a few months will result in a website that is much more effective than the site you operate today.
Suggested Resource: Want your website to be more effective? Want a proven step-by-step system to improve your website. Then check out our Ultimate Internet Marketing System to learn how you can build the ultimate online lead generation machine. Click here to learn more.
Written by Dave Lavinsky on Friday, November 4, 2011
Customers are the lifeblood of all businesses. Get more customers, and you'll generally generate more revenues, more profits and you and your shareholders will be happier.
So what are the best ways to generate new leads for your business? Certainly there are many tactics to choose from: direct mail, radio advertising, referral programs, and so on.
Particularly over the past decade, smart businesses have learned that one of the easiest and most cost effective ways to generate new leads is going online.
One of the benefits of online lead generation is that it's quick. For example, rather than taking a month and spending thousands of dollars producing and getting a radio, TV or print ad to run, you can literally start generating leads online within an hour and at a very low cost.
But the real beauty of online lead generation is the metrics: you can track everything extremely closely to tell precisely how much money you spent, and what your return on investment is.
On the other hand, traditional advertising like television, print and radio are much harder to track. For example, it's very hard to accurately tell if a new customer came to you from a print ad or a television ad, and it's even harder to tell which ad they responded to (e.g., the ad from newspaper A or the ad in newspaper B).
So, let me give you some tips and steps for creating an effective online lead generation campaign.
The first step is to determine what a lead is worth to you. For example, is a lead (for now, let's define a "lead" as someone who visits your website) worth 10 cents to you? 25 cents? 5 dollars?
Clearly, you need to understand what leads are worth to you, so you can generate leads at a lower cost than that amount.
So, how do you determine the value of your leads? The answer is to know, track and constantly improve your conversion rates. Conversion rates refer to the percentage of website visitors who take the actions you desire.
For example, let's say that for every 100 visitors that come to your website:
- 3 buy one of your products or services from your website
- 4 fill out your contact form
- 2 email you
- 6 call you
In this example, 15 visitors took a desired action; or you had a 15% overall conversion rate. And your conversion rate on buying online was 3%, on filling out the contact form 4%, and so on.
The next step is to determine how much each of these conversions is worth to you. For example, let's say:
- Your average product or service sale on your website generates $50 of gross profit
- 25% of people completing your contact form eventually buy from you at an average gross profit of $100 each
- 50% of people who email you eventually buy from you at an average gross profit of $75 each
- 33% of people who call you eventually buy from you at an average gross profit of $150 each
In this example, for every 100 visitors, you would generate $625 in gross profit as follows:
- $150 in gross profit from online sales
- $100 in gross profit from contact form conversions
- $75 in gross profit from email conversions
- $300 in gross profit from telephone conversions
Which means that every visitor to your website is worth $6.25. And as long as you can drive visitors to your website at less than this amount, you will generate profits.
Importantly, as mentioned above, not only must you know your conversion rates, but it is critical for you to continue to test and track to improve your conversion rates. For example, by changing the layout of certain pages of your website, you could boost overall conversions by perhaps 25%. This would mean that the average value per visitor to your website would jump from $6.25 to $7.81.
Not only would this jump allow you to boost profits, but it would enable you to outspend your competitors and advertise in places where they can't (since they perhaps generate only $5 per visitor). This is how you can truly dominate your market.
So, let's discuss where you can generate leads online. Here are my five favorites:
1. Search Engine Pay Per Click Advertising: Via Google AdWords and Yahoo/MSN pay per click advertising, you can reach tons of web surfers. While many advertisers lose money with this method, if you know your metrics and improve them, you can make a killing here.
2. Social Media Marketing: You can drive lots of traffic to your website using social media sites such as Twitter, YouTube and Facebook.
3. Social Media Advertising: Some social media sites such as Facebook and LinkedIn have specific advertising programs to allow you to attract their members and drive them to your website.
4. Online Media Buying: Online media buying is purchasing ad space on desired websites. Unlike pay per click advertising where you pay each time someone clicks on your advertisement, media buying is typically charged on a CPM or cost per thousand basis. That is, you pay every time a visitor sees your ad, regardless of whether or not they click on it.
5. Search Engine Optimization: Search engine optimization (SEO) is the process of getting your website to be listed at the top of the search engine results for your most desired keywords and keyword phrases. Gaining top positions on certain keywords can drive hundreds, thousands, and even hundreds of thousands of leads to your site each week. However, SEO results do not happen overnight; you need to have a strategy in place and invest in this lead generation technique.
I want to mention a key point here. You will generally be more successful if you do an excellent job executing on just ONE of these five tactics, versus doing an average job executing on ALL five tactics at once. So, I recommend starting with one tactic and gaining success, and then adding the other tactics.
The final point I'd like to make with regards to lead generation is that you must also have a lead nurturing mechanism in place.
Specifically, not every visitor who comes to your website is ready to buy right away. So, make sure you have mechanisms in place to capture those leads (perhaps by offering a free report in exchange for their email address), and then send emails to those leads to nurture and maintain your relationship with them over time. When they are ready, and when they trust you, they will buy.
Suggested Resource: Want unlimited online leads? And want a proven step-by-step system to get them. Check out our Ultimate Internet Marketing System to learn how you can build the ultimate online lead generation machine. Click here to learn more.
Written by Dave Lavinsky on Friday, October 28, 2011
Do you have a great business or business idea?
That, with an infusion of millions of dollars could become a huge success story?
If so, you should be talking with venture capitalists or VCs. As you probably know, VCs are the folks with the big checkbooks. Who have funded numerous successful companies like Google, Yahoo, Ebay, Twitter, Federal Express, and more.
Written by Dave Lavinsky on Thursday, October 27, 2011
A financial dashboard is a series of numbers that you look at on a periodic basis to judge the financial health and the performance of your business. Your financial dashboard also helps keep you and your team stay focused towards achieving your goals.
Your dashboard can be maintained in Microsoft Excel, online, or in any other program of your choosing.
Importantly, the financial dashboard allows you to always know what's going on in your business, and alert you to problems before it's too late. As you probably know, you cannot improve what you cannot measure, and you need to track your progress to make sure you are always getting closer to achieving your goals. Your financial dashboard allows you to achieve these two objectives.
The key to your financial dashboard is the metrics you decide to include in it. Another name for these metrics are your "KPIs" or Key Performance Indicators. As the name indicates, KPIs are the metrics that judge your business' performance based on the success you would like to achieve.
Examples of KPIs you might want to measure in your business include:
- $ sales/revenues
- # of new customers
- # of subscribers
- # of PR mentions
- # of website visitors
- # of products manufactured
- % cost of goods sold
Importantly, maintaining a financial dashboard (FD) with the right Key Performance Indicators (KPIs) will lead you to success. Hence my formula:
FD + KPIs = Success
However, if you have never built or maintained a financial dashboard, it can be a little overwhelming at first. So follow this 5-step action plan:
Step 1: Determine which KPIs you will include in your dashboard
The first step is to choose the Key Performance Indicators to track. In selecting them, answer these two questions:
1. What KPIs would help you manage your business?
2. What metrics would you like to improve (e.g., sales, # of product returns, customer satisfaction, etc.) -- each of these metrics should be in your list of KPIs.
Step 2: Decide how often you will measure each of your KPIs
You need to view all of your KPIs on a regular, periodic basis.
But some KPIs need to be viewed daily, and for others, weekly or monthly may be more applicable. For example, a KPI for your company may be how many outbound calls your sales team makes. You may want to measure this daily or weekly (you probably don't want to measure it only monthly, since if the numbers are too low, you want to correct the problem more quickly). Conversely, you may only need to measure your advertising expenses monthly.
Step 3. Determine what you will measure each of your KPIs against
You also need to determine against what you will measure each KPI.
For example, if today were May 12th and your monthly sales were $84,617, how could you tell if this was good or bad? That's why you need other figure(s) with which to compare your KPIs.
For example, you could compare your May 1 - May 12 sales results against:
- Previous month's results (e.g., April 1 - April 12)
- Current month projections (e.g., your forecast for May 1 - May 12)
- Last year's results (May 1 - May 12 of the previous year)
Step 4: Choose the program in which you will maintain your Financial Dashboard
You need to choose the program in which you will maintain your Financial Dashboard.
The simplest program is a spreadsheet program such as Microsoft Excel. In this spreadsheet, you would simply list the KPIs in the first column and then the results in subsequent columns. In doing so, you might categorize the KPIs based on the frequency you update them, and make sure to show the relevant figures that you're comparing each KPI against.
Another option for your Financial Dashboard program is to use a program such as Google Documents. Google Documents offers a spreadsheet program hosted online that multiple users can view and update at a time. This makes it easier to update and view the KPIs (and not have to deal with multiple documents being passed around).
Finally, you may want to invest in financial dashboard software...either software that's "off the shelf" or software that's customized for your business. Such software can often use APIs (application programming interfaces) that automatically pull figures from certain places (e.g., it automatically pulls your payroll figures from your payroll software; automatically pulls your revenue figures from you accounting software; etc.). Doing so simplifies and automates the process of maintaining your Financial Dashboard.
Step 5: Determine who in your organization will maintain your Financial Dashboard
The final step is to choose the person who will be responsible for creating and/or updating your financial dashboard. Because it cannot be you. While the financial dashboard will be invaluable to your company, the work involved in maintaining it is "data gathering"; important work, but not the $500/hour+ work that you need to be doing as a business owner (i.e., coming up with new marketing ideas; working on ideas to improve performance on each KPI, systematizing your business; training people; etc.).
Follow these 5 steps and you'll have a financial dashboard that allows you to methodically and successfully grow your business.
Suggested Resource: Watch this video to learn how double your business by creating the right KPIs and methodically improving your performance with our Strategic Plan Template.
Written by Dave Lavinsky on Friday, October 21, 2011
This Thursday at 3:35PM I will be checking my email.
Doesn't sound too exciting, does it?
Well it actually is.
Let me explain.
A few years ago, I started trying several techniques to improve my productivity. Like you, and pretty much every other entrepreneur I know, I have tons of ideas and a massive list of things I'd like to accomplish.
So, I figured it was worth investing in productivity techniques that would allow me to do more in less time. Although, I must admit I was extremely skeptical at first, and thoughts of "how can anyone possibly give me tips on how to be more productive," raced through my mind.
And for the most part, I was actually right. I read several books on productivity. And most didn't really help me. The books took up pages and pages telling stories. Which were interesting...but I was reading the book to save time, not to spend time.
And most of the techniques I read about were common sense. Like do the hardest stuff first so it doesn't get brushed aside. (We all know this; making me read it in a productivity book isn't going to help me).
And then there were techniques like the Pomodoro Technique. In this productivity technique, you work in 25 minute chunks of time, and have a physical alarm that goes off to mark the time.
This one wasn't for me. Not only was I not thrilled to hear alarm after alarm after alarm, but 25 minutes just isn't enough time for me. In fact, I've been writing this essay for nearly 25 minutes already. Should I just stop now? I haven't even gotten to my main points.
Ok. So, while I read a lot of common sense stuff, and tried some techniques that didn't work for me, there WERE some techniques that worked well. In fact, they worked really well and have allowed me to skyrocket my productivity.
The most important one of those techniques is scheduling all of my days.
Before I tell you about my scheduling habits, I want you to know about Parkinson's Law. Parkinson's Law states that "work expands to fill the time allotted to performing it." What that means is that if you have three hours to complete a task, most likely, it's going to take you the full three hours to complete that task.
Now most people go through their day without a schedule - without a minute by minute, hour by hour schedule. And as a result, they don't have any deadlines and thus they take a lot longer to complete a task. Parkinson's Law says that if you have to work on a report, and you allocate 3 hours to it, that you are going to work during that 3 hours, and you are always going to stress at the end and procrastinate a little bit and really work hard that last 15 minutes to accomplish that goal within the 3-hour period.
On the other hand, if you only gave yourself only an hour to complete the same report, perhaps scheduling it from 10AM to 11AM, what would happen is this: you would work harder during the hour. You would be much more focused. And you would complete virtually the same work - or even better work - in just one hour.
By setting deadlines for tasks, you complete the tasks faster. You are much more focused on them. You race against the clock, but not in a bad way. I'm not talking about creating stress here. Rather, you are creating a friendly competition against the clock. You start thinking, "it's 3:19; I have to complete this project by 4 o'clock because at 4 o'clock, I have to get to my next meeting...what do I have to do to get this done?" Your mind starts working and you accomplish it, and it's fun. You are much more productive and successful.
So the solution is to schedule every hour of every workday. What I do each week is set my weekly goals. Then I break the goals into pieces that take no more than 2 hours each. And then I schedule each of those pieces into my calendar.
Importantly, I treat these calendar appointments as importantly as I treat a meeting with another person. I don't blow them off. I'm not late to them. I'm there on time and I get to work.
Now, what happens if I receive a phone call? Well, it goes into voicemail. Just like I wouldn't take a phone call if I were in an important meeting with a client, I don't take it if I'm in an important meeting with myself to accomplish a task.
What I do, however, is schedule several times throughout the day to respond to phone calls and emails. In fact, I typically schedule three half-hour blocks each day (and as you learned form the title of this essay, on Thursday, one of my blocks is from 3:30PM to 4:00PM).
Scheduling your days and working in time chunks will significantly boost your productivity. You will get much more focused on accomplishing tasks (FYI, I now have 11 minutes to complete this essay before my next task; so I'm highly focused on completing it right now).
And it forces you to get your high priority tasks done since they are hard scheduled into your workday. I recommend scheduling your entire week before 9 am on Monday. And, in addition to half-hour blocks to check email and call back voicemails, you can schedule 30 minute blocks for employee or customer questions, etc.
The key is getting the critical tasks on your calendar and not letting anything interfere with you working on them and completing them.
It is important to note that scheduling your days and sticking to your schedule takes discipline. You can't expect to start doing it cold turkey. It takes time. What happens is that it's too easy to ignore your calendar if you're not used to it. And at first you won't be as good at estimating how long things take. So your time will run out and you'll cut into your next appointment time.
So start slow. Schedule just a few meetings with yourself this week (and stick to them). And then next week schedule a few more. And so on.
Before long, you'll be calendaring out your weeks and accomplishing so much more than you ever thought possible.
Suggested Resource: I've just uploaded a new video that teaches you even mroe about increasing your productivity. Watch it here.
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