Fun with Numbers, Part 5

This week I’ve written about how improving various numbers can help you in running your paint contracting business. Today we are going to look at how small improvements in each area can have a very significant impact.

Again, we are assuming the following:
You want to increase revenues by $100,000
Your closing rate is 33%
Your average sale is $3,000
Your average lead cost is $100
Which means you must sell 33.3 more jobs, generate 100 more leads, and spend $10,000 more on advertising

Let’s look at a 10% improvement in each area:
The closing rate rises to 36.3%
The average sale increases to $3,300
The cost per lead drops to $90.
Which means, you must sell 30.3 jobs, generate 83.5 leads, and spend $7,512 in advertising. A 10% improvement in each area can reduce the advertising costs by nearly 25%!

Again, the point here isn’t how to accomplish these improvements, but rather how to project the results. When we can project results we can determine the most appropriate course of action to take. We can determine what our goal should be, and how we can attain it.

Knowing our numbers give us a very powerful took in managing our business. Rather than guess as to what might happen, we can make reasonable predictions based on past experience. While the past is no guarantee of future results, it certainly gives us a sensible basis for making projections.

Improving any of your numbers takes more than a few entries in a spreadsheet. It requires that you identify what actions will lead to those improvements, and then implementation of those actions.

As this series has shown, significant improvements can be made in the business by making a number of small improvements. Rome wasn’t built in a day, and neither will your paint contracting business.

© BEP Enterprises Incorporated 2008