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Apparently, data has become more ubiquitous than the stars in the sky. In fact, the amount of data produced daily via the Internet is set to top 44 zettabytes. As you might assume, that’s more data than you could possibly fathom or use.
However, this isn’t to suggest that culling through your incoming real-time and historical data isn’t important. It is, especially if you intend to grow or even scale your business without going over budget. In fact, you can save quite a bit if you figure out which business data points to collect and interpret.
Below are five pieces of data that you’ll want to consider as you get frugal.
It’d be great if you made 15 million this quarter. But what if you spent $14.9 million on purchases? That’d be a shame.
Many entrepreneurs forget to measure and temper their expenses. If you look carefully, you’ll notice that the majority of your expenses probably fall into one of two buckets: fixed or variable. While fixed expenses probably aren’t necessarily negotiable, variable (or semi-variable) ones probably are.
In other words, examine your variable expenses like routine office supplies and tech platform subscriptions. Then, figure out if you can chip away at how much you’re paying. For example, you could join a group purchasing organization to get a better price on supplies. Alternatively, you might be able to pay off annual bills in one chunk to lower your overall cost. Or perhaps you could switch to a generic brand or different supplier.
Tracking your fixed and variable expenses will help keep your spending in check. And that means more income stays in-house.
If you haven’t been strictly tracking all the costs associated with obtaining one customer, you’re missing out. Using digital marketing analytics and software, you can figure out your cost per lead. From that point, you can determine how much money you spend to turn that lead into a buyer.
You might be shocked to discover that your total cost of customer acquisition is far greater than you imagined. Oh, and don’t forget to include “hidden” costs. Many companies forget to include employee time and salary to move a target prospect through the full sales funnel.
Once you have a baseline, you can experiment with different ways to minimize your acquisition spend. For instance, you may notice that the bulk of your costs come at the beginning stages. This gives you motivation to streamline the model you’re using to start the wooing process. Be sure to conduct A/B split tests on everything from paid ad content to social media headlines. That way, you can trim the fat out of this necessary expense.
Companies today tend to win over talented job candidates using various perks. Some offer robust retirement packages featuring 401(k) plans. Others may provide generous paid time off or even occasional sabbaticals. While some benefits don’t cost too much to institute, others can be expensive.
Take company-sponsored health insurance premiums. An average of 57% of companies offer their full-time workers health insurance options. While your company probably doesn’t want to stop providing healthcare, you might want to cut back on unused perks. As one Forbes report noted, benefits like free swag, complimentary food, and even prepaid cell service aren’t actually making your employees happier —and end up eating away at your profit margins.
Evaluate which of your team benefits is getting you a thumbs up versus which is dragging you down. You can always put the money you save back into a perk your staffers will appreciate, boosting loyalty and engagement.
Chances are high that you have an inkling of your revenue growth if you’ve been in business at least a few years. Still, you might not have considered how much each client plays into your revenue growth.
A good rule of thumb is to ensure that no one client makes up more than 10% of predictable revenue. Why? The problem is that if the client disappears, you’re working at 90%. And that could be enough to cause you to significantly lower your profitability ratios and margins.
Of course, you may have tons of clients, especially if you’re selling B2C rather than B2B. Nevertheless, even if you have a lot of customers, you should know how many are necessary. What amount of buyers do you need just to keep the doors open and the lights on? These data points will inform whether or not it’s time to up your hustle and diversify your customer portfolio.
If you get big enough, you’re going to wind up with delinquent payers. At the very least, you may have clients who take a while to pay their invoices. Be certain to track these numbers.
What difference does it make if you feel you have a general handle on the situation? You might be surprised to notice that it’s gotten out of hand. Since COVID struck, many companies are paying much more attention to delinquent accounts.
You could have tens of thousands, if not more, in outstanding invoices. Even if you have to pay a professional collections agency to recover some money, you would be better off. But not knowing how much you’re missing is a misstep. Remember: The dark is only good for sleeping and growing mushrooms.
Data is everywhere, and it’s fairly cheap to find and analyze. Avail yourself of the data points most vital to operating a lean, streamlined organization where money’s never wasted.
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