Saturday, January 28, 2012

Measuring the pulse of my business

I have built my business around reoccurring customers. I will not turn away a one time job if we can fit it on the schedule but they are hard to predict and even a large one time clean is normally only $500. For the ease of the math, assume your average bi weekly (every other week) client is billed $100 a visit, they will spend $2,600 a year on for as long as you do business with them. Because they are so important to me, I have created a simply point system to track my business. Basically a client is assigned a value for the number of times per month we would clean them. Weekly clients are 4 points, bi weekly are 2 points, and monthly clients are 1 point. We then keep a running tally. If we gain a new client we add the points. If we lose them we subtract the points. I have a big board in my office that we reset every month that looks like below.

Name               Gain or Loss               Frequency         Value             Total
Smith, Jane       Gain                            Monthly            +1                 +1
Moore, David   Gain                            Weekly            +4                 +5
Burns, Linda      Loss                           Bi Weekly        -2                  +3

I like my system because it is a quick and easy to way to keep track of my business. Some people disagree with my system and say that some clients are worth more than others. Say for example a large home I charge $150 a visit is counted the same in my model as a small apartment we clean for $85 per visit. This is true, but I find over time it all seems to average out and you can drive yourself crazy trying to track your business down to the dollar on the fly. My software will give me the actual $ gained and lost each month when I run the report at month end but I like this system because it is easy to understand for all my employees. I think of it this way.  This system is about making sure I have my finger on the pulse of my company.  Just like there are fancier ways to measure health with extra equipment, there are much more detailed ways to keep track of your business.  But much like taking the pulse of a person, this method lets me quickly know if I have a problem or not without all the fuss and it is easy for everyone to understand.

I have this on a huge white board so everyone can see it. We take it a step further and write wins in Green and Losses in red. This keeps everyone in my office aligned on what really matters to me, adding more on-going clients than we lose. They know when there is a lot of green on the board I am giving extra hours and hiring. They also know if the board has too much red on it, I will have to start cutting back on hours.

In the example above we are plus 3 for the month.  This means we have booked 3 more on-going appointments per month than we have lost.  If we take the average cleaning charge of $100 from the example above, this means we have booked $300 a month in on-going revenue.  That is $3,600 a year.  I can tell all that in 30 seconds with no software or fancy reports.  That is how I keep my finger on the pulse of my business. 

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