How Two Magic Numbers can give you a predictable and reliable business

Running a business is hard work isn’t it?

That’s the truth of it. 

Sleepless nights. 

Long hours. 

Financial stress. 

That’s how it goes for a good few years, while you get yourself established. 

And then, some magical lever gets pulled, and then you’ve made it. 

Out the other side. 

But how do you get to that magical point? What makes the magic happen?

There are actually two things that make it happen. 

Two Magic Numbers. 

These two numbers, once you know them, give you a level of certainty and confidence in your business. 

They mean you can plan ahead. 

They mean you can predict the future. 

They give you the space to concentrate on the things that matter. 

And they allow you to safely turn down the bad clients, the ones who always hammer you down on price, the ones who take up all of your time, the ones who are always complaining. 

The first Magic Number is your Conversion Rate. 

Suppose you go out and get 100 business cards from a load of networking events. You go through those business cards, calling each person up on the phone, and you end up with 30 people who are willing to have a meeting. You go to those 30 meetings and you end up with 15 people who would like you to give a presentation to the board. You give the presentations and you end up with 10 people who would like to buy your services. 

10 out of 100 leads turn into business. Your conversion rate is 10%

Your second Magic Number is your Sales Cycle Length.

Let’s say you spend all of January getting those 100 business cards. Throughout January, you’re on the phone to people, but some are busy, others are away – so your 30 meetings end up being booked across January and February. Your first new client from this round of networking signs at the beginning of February – barely four weeks after you started. But after meetings and presentations, delays and postponements, the tenth new client, signs up in April – almost 16 weeks after you got their card. 

On average, the 10 new clients you got signed up 8 weeks after you received their business card. Your Sales Cycle Length is 8 weeks

Now you know those Two Magic Numbers, you can start making predictions about the future. 

Suppose in April, you did another round of networking, but this time you only got 50 business cards. Based on your Two Magic Numbers, that suggests you’ll get 5 new clients at some time in June. 

The real power of this comes when you decide to use it to your advantage, however. Let’s say you want to raise an extra load of money to go on holiday. If you know your Two Magic Numbers, you can use them to calculate how many leads you need to generate – and when – so that you’ve got the new clients, and the money in your pocket, at just the right time. 

If you’d like to know more about how to calculate your Two Magic Numbers, check out my video and email sequence

Feel like you’re only just keeping your head above the water?

You’re in the car park. It’s 1:55 in the afternoon. Your phone buzzes again. You sigh, picking it up, the dread weighing on your shoulders.

What a surprise! Yet another problem.

That seems to be the story every day at the moment. Every hour. You’re constantly firefighting, always dealing with issues, never switching off.

And now it’s 1:56.

Your kid’s school play starts in four minutes.

If you can just make this phone call, tell Claire in the office to call the client and say you’ll get back to them later this afternoon … then you can get out of the car, run into school and you might only miss the first couple of minutes. You just need to make this call…

It’s overwhelming isn’t it?

And, because it’s your business, you have to carry it on your shoulders.

It weighs you down. Almost like you’re drowning.

The thing is, you’re not alone. I know. I’ve been in that car. For me, the Christmas Concert is the one that springs to mind.

Many of us, who started our own businesses, have been through exactly the same thing. We started out confident in our abilities. We knew we were great at what we did. We knew we could undercut the competition on price. And things went really well at first. In fact, we had so much work, we even took a few people on to help us out.

But that’s when the problems started.

Because, even with the extra bodies, the business still took up loads of our time.

Think about it… when things are going well, you’re out there looking for new clients. But when things go wrong, it’s on you to sort it out.

Sometimes it even feels like you’re spending as much time baby-sitting the staff as you are doing the job. Every decision comes through you. Every complaint comes through you. Everything needed to be double-checked and triple-checked.

It’s exhausting.

So now you’re spending so much of your time dealing with all this stuff and you’ve totally forgotten about why you started the business in the first place.

What happened to loving the work?

The flexible hours?

The extra cash?

The freedom?

An answer in under 3 minutes

The really tricky bit is that, once you get to a certain stage in your business, you need to switch things around. The tactics that got you this far won’t get you any further. In fact, they’re positively slowing your business down.

And driving you up the wall.

It’s time to make changes.

But you can’t do it wholesale though, that’s too much to take in one go. Instead, you just need to take it one step at a time.

Pick off the area that you can have the most impact in, concentrate on getting that working right, then take a moment to relax. As now you’ve got a bit of breathing space.

But where do you begin? How do you know which area will actually give you that space?

An answer in under 3 minutes

Every growing business has at least one of these five main areas that could be improved:

  • Finance – the business needs a degree of profit to survive. We need to make sure the bills are paid, the team get their wages and you get something as a reward for all your hard work.
  • Operations – the business needs to run like clockwork. We need to make sure we consistently deliver a great service to our clients, or they won’t come back.
  • Sales – no business can survive without clients, so we have to make sure we’ve got new ones coming in at the right times.
  • Leads – if we want new clients, we have to get the word out there, make sure we’re attracting people and letting them know what we do.
  • Time – at the end of the day, we need to be able to switch off, safe in the knowledge that the business can look after itself. We’ve taken a huge risk in getting this far, we deserve some time to ourselves to enjoy our lives.

Once you identify the area of greatest impact for YOUR business, there are simple changes that can make a massive difference.

So instead of trying to tackle them all at once, you can focus on the area that will free up the most time and money, giving you the most freedom to live your life the way you should be.

If you’d like to know which area you should concentrate on – and get a few ideas about improvements that can be made in that area – take my quick quiz. You can do it on your phone, sat on the sofa.  It only takes a few minutes and can point you in the right direction for making a positive change to your business.

An answer in under 3 minutes

Never trust someone who has time to do it all

So, you’ve figured out your “X”.

You’ve figured out your five year roadmap to get there.

You’ve figured out your twelve week plan to get you started.

You’ve got one thing to do this week.

Will you do it?

Life gets in the way.

It’s inevitable.

Because “X” is important. That other stuff is urgent. The urgent stuff nearly always takes priority. Normally because someone is shouting at you, you feel stressed and you want that feeling to go away.

So, at the start of each week, choose a time. Maybe it’s one morning or afternoon this week. Maybe it’s one hour per day for five days. It depends on the task you’ve set yourself, on the nature of your week.

But set aside that time. Switch off your notifications and divert your calls.

Set a timer for half an hour and say to yourself “I’m just going to work on this for till the timer rings”. Then get started.

The half hour timer works, because you know you’re not going to spend to long on it. But once you get started, you’ll probably find it easy to continue through your allotted time – the first step is always the hardest.

And, you’ll probably notice that the sky didn’t fall in while your phone was off. Plus you’ve got the satisfaction of knowing you are one twelfth of the way towards your target.

Photo by Jamie Street on Unsplash

Never trust a long term plan

You’ve figured out your “X”. That’s amazing. Very few people actually manage to do that.

You’ve figured out a general roadmap for getting there. Here’s where you want to be in five years. So to reach there, here’s where you need to be in three. Here’s where you need to be in one. Here’s where you need to be in three months.

Three months is important.

It’s far enough away that you can make some significant progress. It’s close enough that you feel the urgency; if you want to get there, you can’t afford to slack off.

So look at your three month target.

  • What are 12 things you can actually physically do to make sure that you achieve your April target?
  • Schedule one of those 12 things each week between now and April.
  • Say to yourself out loud “I commit to doing Y this week as it will help me reach my goal of X”.
  • And then make sure you do those 12 things over the next 12 weeks.

When you get to April, repeat the process.

Look at your January 2020 goal and figure out what the ONE THING you need to achieve by August 2019 is. Then write out 12 tasks from April to August and do one each week.

And then do the same again each quarter – look at your next big milestone, figure out ONE THING you can do in the next quarter to move in that direction then break it into 12 weekly tasks.

This gives you the time to deal with all the day-to-day stuff that gets in the way, whilst still remaining focussed on your life’s purpose. It gives you a chance to reevaluate and change your plans as life throws stuff at you, but makes sure you keep heading in the same direction.

Photo by Julentto Photography on Unsplash

Never trust a GPS

You need to figure out your “X”. What is it that, when you look back on your life, will make you think “I’m so glad I did that”. It might be family stuff, it might be travel, it might be work. It’s up to you. And it can be hard to find. But you’ll know it when you find it.

Then you need to ask yourself – if you genuinely really want X, how long would it take you to achieve it?

Can you do it in 10 years? Can you do it in 5 years? What would it look like to achieve X? Would you need to change your lifestyle? Move to another country? Can you do it as a side-hustle? Or on weekends? What will your family think as you make this your focus?

Because now, you’ve got a destination and a time-frame. Next step is to figure out a roadmap.

Let’s say you think you can do it in 5 years. 5 years is a long time.

Remember it. Write it down and stick it on your wall, so you can see it every day.

(I’m writing this in January 2019 – other months and years are available)

  • “In 2024, I will have achieved X”.
  • Now what is the ONE THING you would need to have achieved by January 2022 to have made real progress towards X?
  • And then, what is the ONE THING you would need to have achieved by January 2020 to have made real progress towards your 3 year target?
  • And what is the ONE THING you can achieve by April 2019 to have made real progress towards January’s target?

Write all of these down on that same bit of paper.

You now have a roadmap for the next 5 years.

But that’s useless without action.

Photo by Jamie Street on Unsplash

Never trust a hippy

If you don’t like “life coaching” stuff, today’s post isn’t really for you. It’s a bit much for me too. But it’s proven itself to be (for me at least) a really valuable way of thinking about things.

Before you can make any kind of plan, you need to figure out what you really want to do. Because running a business on your own is really tough at times. So you have to make sure it aligns with who you are as a person.

My way of doing this, taught to me by someone who is incredibly successful, is as follows.

Imagine you’re 110 years old. You know your best days are behind you. But you’re sat on your chair, in the sunshine, just outside your house. Your eyes are closed and you’re smiling as you think back on your life. “I’m so glad that I dedicated so much of my life to X”

What is X?

It’s a really tough question. But, as all the documentaries on death say, no-one ever says “I’m so glad that I spent years in the office”. If you’re going to spend years in the office, there has to be a reason behind it – something that drives you. It might not even be business related – it could be “I’m so proud that I stood on the moon”, or “I’m so glad that my kids are healthy”. But you need to know what it is and then you can figure out how to get there.

Once you know where you want to go, you can think about how to get there…

Image from “Never Trust a Hippy” by Adrian Sherwood

I don’t want the sale

Earlier this week, we talked about attracting potential clients, by understanding what they want, why they want it and where they hang out.

Then we looked at making sure that they are interested in what you offer, by explaining your offer, showing that it works for other people, taking away their risk and then adding some urgency.

Yesterday we looked at dealing with price objections by adding more to your story; by giving a compelling reason for them to ignore the price.

But there’s one more thing that we need to talk about.

When my business was primarily all about software development, I made one change in how I did things and suddenly the invoices I was sending to clients increased in value by a factor of 10. And the clients were happy to pay it.

It was incredibly simple.

It was also really, really, really difficult.

I just said “no”.

I had been meeting with potential clients, going in to meetings with the expectation that I would be trying to persuade them that what I offer is really good, that the software I could build for them would solve their problems, that the price I wanted for it was something that they could afford.

But I realised that I had it all wrong.

My best clients were ones that I had a long-term relationship with. Because we trusted each other. We knew each other’s strengths and weaknesses and we dealt with them. We worked well together.

So I brought this to my sales process.

Every meeting, I started looking for reasons to say “no”. I started giving them reasons to go with someone else. Have you considered outsourcing the job to India? I know a really good app guy in Aberdeen who could do this for you. This isn’t really my strength, so I should turn it down. Actually, looking at it, the cost is going to be at least three times your budget. There’s no way I can get this finished before next March.

This worked. Some people went away. But the ones that stayed really stayed. I had put all their objections up in front of them, before they had even thought of them. They looked at the objection, came up with their own answer to it and moved on to the next stage. So when it finally came to the deal, I could name my price and set my own payment terms – they were so invested in the project that they didn’t want to go with anyone else.

Take action: Make sure you “qualify” everyone who comes in to your sales funnel. Do you really want their business?

Photo by Masaaki Komori on Unsplash

I know someone who can do it at half your price

That’s one of the most frustrating things you can ever hear.

Someone who complains about the price.

The thing is, it’s actually your fault.

Now there are some businesses where you don’t have much control over the price. Commodities – where there are so many available vendors that the “market” sets the price and you can’t differentiate yourself.

But most businesses – retail, products, services – have room for differentiation.

Your difference might be that you’re cheaper than everyone else. Personally I think that’s a dangerous game to play, as there’s always someone who is willing to go cheaper – maybe as a loss-leader to destroy your business.

But if you know your ideal customer (who we spoke about earlier in the week), you understand why they want your stuff and how much it’s worth to them, you should be able to choose points of differentiation that make price irrelevant.

Let’s say you’re a second hand store. You buy up used goods, clean them up a bit and then sell them on. Necessarily, the price you offer for a particular item is going to be less than the price someone can make from it by selling it themselves. You need to spend some time cleaning it up (which costs) and you need to add some markup, in order to make a profit.

So, straight away, we’ve got a price discrepancy. I can take my X and sell it with you for £20. Or I can take my X and sell it on the local Facebook buy/sell page for £30.

Why would I go with you?

This is where your story comes in. You need to go back to your customer’s “why”. You need to connect it with you.

So maybe you tell the story of how you were selling something on Facebook, got scammed and ended up out of pocket. The burning injustice of it, though, was you were going to use the money to buy your niece a present for getting through her exams. When this happened, you vowed to ensure that no-one had to go through a scam buyer like this again. And you make sure that everyone who sells through you is treated fairly, with guarantees, up-front pricing and safe and understandable terms.

Suddenly, there’s a reason to take the £20 instead of the £30. It’s all to do with peace of mind. Of trust. Of safety. Which is easily worth the £10 difference.

Take action: Don’t compete on price – come up with a differentiation

Cheers

Baz

PS: If you’d like a hand coming up with your differentiation, drop me an email – hello@clientrobot.com

Photo by Jordan Rowland on Unsplash

They seemed really interested but then I never heard from them again

People are amazing. I love people because they’re so interesting. It’s very rare that you can figure someone out, even if you’ve known them for years.

But there are patterns that you can spot. Stuff that applies, more or less, to all of us.

And one of those things is most people hate disappointing other people.

So when you’re telling them all about your incredible product or service, they’re going to sit there, nodding and smiling, replying that it sounds fantastic and it’s exactly what they’re looking for.

Until the time comes to sign the contract.

And then they’re gone. Vanished. Never to be heard from again.

It’s just human nature.

But there are things you can do about it.

Firstly, make sure you don’t waste time on people who definitely aren’t going to buy. This means setting up a “qualification” stage where you ascertain if this is someone who could be a customer or not. We’ll talk about this later in the week.

Secondly, structure your offer so that it’s so compelling, they genuinely do feel that it’s exactly what they’re looking for. Not just that, but they need it today.

There are four aspects to the structure.

Number One – you need to hit their emotional buttons. This training course isn’t about how you can increase your revenue by 10% over three years. This is about how Susan is going to look like the automatic choice for promotion next year. This car isn’t about the leather seats or air conditioning. This is about how your neighbours will be secretly jealous and twitching at their windows whilst you wash your car every Sunday.

Number Two – you need to show them that they’re not alone. It’s not just Susan that you’re going to get promoted; you’ve already done it for George and Hardeep. It’s not just your neighbours who are going to be jealous, Annette gets compliments on her car all the time.

Number Three – you need to take away the risk. If you’re not satisfied with the course materials after seven days, we’ll give you your money back – no questions asked. Why not borrow the car for the weekend and you’ll see how easily it handles the shopping, as well as being amazing to drive on a Sunday afternoon in the countryside.

Number Four – subtly add some urgency. Drop hints that it takes time to get results – so if you want that promotion in September, you better get started now. Let them know that there have been a couple of other people interested in the car; you can order another direct from the factory but then it takes 2 months to arrive.

None of this will help bring back the prospect who’s just ditched you. But if you get those four aspects across with your next prospect – without laying it on too thick – you’ll find that the people who get past your qualification stage will be genuinely interested in what you have to offer.

Take action: Put a sales system in place that guides people through the four stages

Cheers

Baz

PS: If you have any questions about this, drop me an email – hello@clientrobot.com

Photo by rawpixel on Unsplash

I can’t find any potential clients

If you’re on the hunt for potential clients and you can’t find them, you’re probably looking in the wrong places. Which sounds glib, but is actually pretty true.

You need to understand who your customer is.

What do they want? Why do they want it? What is it worth to them? And why would they choose you over anyone else?

How do you figure this stuff out?

Look back over your existing customer list – what patterns are there amongst them? Give a couple a call and ask them why they choose you over the competition.

Once you know these things, you can then start searching for them.

Where do they hang out? Both online and offline.

Online:

Is it on Facebook or Instagram? LinkedIn? Is there a subreddit for them or maybe a website with a discussion forum?

Offline:

Do they go to networking events? Is there a user group? Or evening classes?

Next, you need to go and meet them. Either online or in person. Ask them questions. Find out what makes them tick. Learn to use the same words and phrases as them.

Because, you need answers to these questions:

  • Who are they?
  • What do they want?
  • Why do they want it?
  • What’s it worth to them?
  • How do they describe it?
  • Why would they choose to buy from you?

And once you have those answers, you can use their language to mirror back at them and they will sense that you understand their need and they will be happy to talk to you to find out more.

Take action: Who is your ideal customer?

Cheers

Baz

Photo by rawpixel on Unsplash