How Two Magic Numbers can give you a predictable and reliable business
|Apr 15, 2019|
Running a business is hard work isn't it?
That's the truth of it.
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.