It’s never a great idea to waste money but the current market makes it even more important that your able to account for every penny spent. Coming from an analytical background, I’m always interested in the numbers behind the business. I always want to measure the effectiveness of any activity I engage so that I can be happy that I’m putting my money and time to good use.
Two of my favourite questions to ask business owners are:
- How much have you spent on ……… in the last year?
- What is your budget for………?
(You can fill in the blanks with any of the activities that your business engages in)
Most business owners in my experience struggle to come up with accurate answers. They have no clue where they have spent their money and worst still they don’t know where its working for them or not.
Not having a budget and not monitoring how much you’ve spent on past activities mean that you may continue to spend on activities that are not adding any value to your business.
I believe that is the way to an average, mediocre business – and I hate mediocrity!
So I have a simple 3 step approach to ensuring your money works for you. Take a notepad, flip chart or spreadsheet (whichever way you are most inclined)
- Itemise the activities you regularly engage your business in and assign a cost to them – everything has a cost believe me.
- List the leads, sales or measurable benefits generated from each activity
- Review the list with the aim to tweak or discontinue anything that isn’t working for you and introduce another activities that could give a better return.
This is how I applied this to my business development activities.
Once upon a time, I visited every networking group I could find. I was new in town and needed to meet other business owners fast. I was spending on average £30 for the lunch meetings, travelling and parking for an extra £10-£15 on top of that. Do a few of these a week and it begins to add up. Not to mention the time spent travelling back and forth and child care costs for those activities that are scheduled really early in the morning before nurseries open!
When I mapped each group to the business they generated, I drastically cut back on the groups and focused on the few that generated the most leads for my business. Although at first glance all the groups should have been ideal (I’d shortlisted them based on my ideal client profile) not all of them converted at the same rate for me. So I had to weed out the time wasting. The crazy networking had served its purpose and I needed to get more depth and build deeper relationships where it was working.
What are the time wasters in your business? What activities have outgrown their usefulness? You’ll only know if you monitor it.
Your money needs to work for your business, monitoring it is the only way to ensure that it does.
Any thoughts, experiences or feedback?