You’ve heard it before: “Know your numbers.” But what numbers? Gross revenue? Profits? Customer satisfaction? If you’re feeling lost in a sea of metrics and wondering how you measure success as a business owner, you’re not alone.
Most entrepreneurs fixate on a single figure: gross revenue. Whether that goal is $100,000, $1 million, or $10 million, that number does not provide enough information to create and scale a successful business. Fortunately, there are metrics that matter and allow us to measure and track what truly drives growth so that you can start building the business you want.
Top Line Revenue is Not the Only Goal
There are a million ways to build a million-dollar business. There are infinite combinations of incremental changes that, when grouped, can profoundly impact your business. Top-line revenue should be only one of many target numbers in your business.
In a recent podcast interview, one of my guests mentioned insta-tactic promoters who teach you how to sell $1 million on Instagram without having a single sales conversation. He quipped that he could teach anyone how to do that, but it would cost them $1.2 million in advertising. While that is an extreme example, it shows that top-line revenue is not the only indicator of success.
Success often actually means focusing on lower costs for client fulfillment or lead generation. Choosing which changes to make in your business starts with tracking your numbers. Otherwise, you won’t know where to begin or discern which numbers are performing well and where you can actually improve things.
Success Often Requires Tweaks Not Overhauls
The good news is that the changes to make are often tweaks, not overhauls. It is seldom about doing more work; it’s about different work. You rarely have to start from scratch and throw away all your efforts.
In my business, I track all sorts of numbers that all get reviewed constantly. During my annual planning for 2024, it became horrifyingly apparent that the most expensive, most time-consuming, and most complicated pieces of our marketing plan were taking up 80 percent of our resources and only producing 20 percent of our revenue. We could not get incrementally better at it in any way that would have solved the challenge.
When we dove into the numbers and saw that just a few pieces of what we were doing were having the most significant impact, we let go of the excess and focused on the pieces that were working, freeing up time, money and energy that we could then pour heavily into what was working.
This doesn’t mean that the parts that weren’t working well were “mistakes” or “wrong” as they worked for me before – they will most likely work for me again in the future – it just wasn’t working right now while other things were.
Your Feelings Can Lie, But Your Numbers Won’t
The interesting part of my discovery is that the 80 percent of the efforts that were only producing 20 percent of the outcomes were actually doing a good job in terms of producing engagement with my audience. But – and this is a really big BUT – that interaction and engagement just was not turning into sales the way we wanted.
That is why tracking actual numbers that have to do with your business is essential, not vanity metrics such as views and likes. If we weren’t tracking the actual results of our efforts, all that engagement would have made us think we were being effective. In a recent podcast, I spoke about how no matter how good your instincts are, your feelings will lie to you. When you have actual data to review, it’s easier to follow your instincts with the facts thrown in there to help keep you on track.
I often advise business owners to watch a few episodes of Shark Tank and listen to the questions the sharks ask. They love a good story behind the business; you can see their emotional attachment to a compelling story. Still, the deal always comes down to the numbers, no matter how outstanding the entrepreneur might be.
Imagine what would be possible for your business if you did a deep dive each quarter and picked just a few numbers to implement an improvement plan. You don’t need massive overhauls, but Imagine the cumulative effect that would have by the end of a year!
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