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

A confession

You probably subscribe and listen to a load of people who have job titles like “Consultant”, “Coach”, “Expert” and “Maven1“. These are people who are constantly posting in-car videos on LinkedIn, giving out advice, releasing podcasts and writing blogs. They’re obviously amazing at their jobs – why wouldn’t you want to hand over thousands of pounds in cash to them? Don’t you want that fantastic life too?

  • You can tell their lives are fantastic because they’ve sorted out their own work-life balance2.
  • You can tell their lives are fantastic because they then went on to save the lives of at least three of their clients3.
  • You can tell their lives are fantastic because their profits are going through the roof, and they’re recording that in-car video in a Lambo.
  • You can tell their lives are fantastic because they spend three months of the year hiking through the rainforest. For fun4!
  • You can tell their lives are fantastic because their team never makes a mistake and is always happy and smiling.

I’m not like that.

  • I’ve worked for myself since 2007, because I thought my boss was making a mistake and should have been listening to me. Eleven years later and the jury’s still out on whether I was right5.
  • I am very very good at what i do – especially when it comes to sorting out problems for my clients – but I’ve not really managed to sort myself out and have been winging it ever since.
  • I was really really lucky at the start, so I didn’t have to learn about how to run a business for years – no sales, no marketing and as for finance, well…
  • I then started a company with friends and we got a load of money from investors, which we spent very quickly. And that’s when things started to go really wrong.
  • I was sick of working alone, so I hired a team on the cheap6.
  • They didn’t do a great job as I didn’t know how to get them to do what I wanted7.
  • I spent all my money on these people working with me – they were cheap but took ages to get things done.
  • I was using up my evenings and weekends fixing mistakes8.

All of which meant I was ready to jack it all in.

Several times.

So this is the bit where I turn in to one of those amazing perfect consultant types.

Because I sat myself down, gave myself a good talking to and …

  • spent a load of time and effort learning about sales
  • went out networking even though I found it really uncomfortable at first
  • I read that to do sales, you need a CRM system9. So I tried out 11 different ones and eventually found one that I liked
  • I suddenly realised that I had my sales process all wrong

The sales process that I had built for myself, that I implemented in my CRM, was based around the idea of promoting myself to people. This is what I do, I’m really good at it, it will save you time and money if you hire me. Please hire me.

Then I realised that actually, the clients I worked well with were the ones where we had a relationship. Where we trusted each other. So I switched my process around to look for people I thought I could work with. And it meant I was looking for excuses to say no at every opportunity.

That was when I had another revelation – the CRM isn’t going to help you. Your process has to be right first.

This inspired me to put together a process for my team – a seven stage software development system – and I used expensive project management software to track it all.

But I totally failed to heed the lesson from before. The process didn’t work for me. The software didn’t work for me.

It just meant that I did the work I didn’t like and the team did the work I did like.

The project management software was lovely. I could keep track of my overflowing to-do list and see how late every project was – and it updated in real-time so everything got later and later right in front of my eyes.

Again – my realisation was that the software doesn’t fix things for you. I needed to get the process right before even thinking about software.

So I reset.

Now I’ve got a really small team who work on the things I don’t really like doing and I’ve kept the things I like doing to myself.

I still pay for various bits of software but I’m very careful about how I use them.

And I don’t set myself a ton of deadlines, which make me unhappy as they whizz pass, unfulfilled.

I have to say that I still don’t make very much money – I have a problem with pricing my services which mean I give away a load of valuable work for cheap.

And I still don’t have that much time – I take on too many projects and then get caught up trying to deliver them all.

And, despite all these revelations, I’m still rubbish at saying no. Which is why I have too many projects on.

But this is my story about how I’m working my way out of these things. Unlike those other consultants, those bloggers and vloggers and podcasters, it’s not a picture of a perfect life.

It’s messy and annoying and nowhere near where I want it to be.

Because I’m very good at solving problems for my clients – not so good at it for myself.

So, I’m Baz and that’s what I’m going to be talking about over the next few weeks and months.

If you want to subscribe to the audio so you never ever miss my beautiful voice, just choose your podcast app and click below:

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  1. I have no idea what that means
  2. if such a thing even exists
  3. they literally wrestled alligators
  4. Of course, they also adopt and save a whole village of brown children at the same time
  5. I was right
  6. Low wages in exchange for lots of training
  7. Don’t get me wrong – all fantastic people and good at what they did – but I was crap at looking after them
  8. and weekdays grovelling to clients
  9. basically a giant address book mixed in with a sales process

How my clients got her evenings back

One of my clients, let’s call her Sarah, had the type of business where you’re out on site all the time. She got paid to go out on site, use her expertise to evaluate the situation, lay down some remedial work, then return a few weeks or months later to assess whether it had worked. It was health and safety based and important stuff – other businesses depended on her.

As her reputation grew, as she got more and more well-known, she was spending more and more time out on the road, in the van. Of course, to manage a business, she also needed to keep up with the admin work – book-keeping, invoicing and, most importantly, job sheets. Because this stuff was safety related, if the job sheets weren’t right, there were legal implications for both her and her clients.

So she hired in some staff. This was a big step. The business could now cover a bigger region and she was spending less time in the van. But her days were spent with even more administration. Book-keeping, invoicing, collecting and filing job sheets. On top of that, she was constantly on the phone, scheduling appointments, telling the others where to be, chasing things up if anything went wrong. Which it often did.

This meant dealing with clients during the day and paperwork and administration at night. Sometimes on weekends too.

It was all getting too much.

So we put in a simple system.

As clients needed work doing, it got entered into the system. The team got notifications of where they needed to be, and when. They filed their job sheets electronically. Follow-up work was scheduled automatically. Sarah got to spend more time in the office. Instead of constant fire-fighting, she could look to growing the business. Expanding geographically.

Now she works across the whole country, proudly boasting many national chains as her clients.

And none of this was complicated. The team liked the system as it was so simple and easy to use. Sarah liked the system as it made her life so much easier.

And most importantly, she got her evenings back.

If your business is struggling, there are five areas where you can make similar, incredibly simple changes. These are:

  • Finance – the business needs a degree of profit to survive. You 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. You need to make sure you consistently deliver a great service to your clients, or they won’t come back.
  • Sales – no business can survive without clients, so you have to make sure you’ve got new ones coming in at the right times.
  • Leads – if you want new clients, you have to get the word out there, make sure you’re attracting people and letting them know what you do.
  • Time – at the end of the day, you need to be able to switch off, safe in the knowledge that the business can look after itself. You’ve taken a huge risk in getting this far, you deserve some time to ourselves to enjoy your life.

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. It only takes a few minutes and can point you in the right direction for making a positive change to your business.

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

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

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