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23rd March 2012
Nuala Greenan , #allaboutbusiness #all about business #allaboutbusiness.ie #bank of ireland #Nuala greenan #NG management services #developing markets #ACCA #Interpretation of Financial Statements #entrepreneur #entrepreneurship #entrepreneurial #business start up #sme #own business
Even the least mechanically minded of us understand that a warning light on the dashboard of our car means there's something wrong. When the fuel gauge hits empty we know we need to top up or we could end up stranded on the side of the road. On long journeys we’ll plan fuel stops so we never run the risk of being too far from a service station.
In business the dashboard isn’t quite as obvious but having your own set of “warning lights” in place will certainly help you take action before a serious problem occurs.
Think of the fuel gauge as your sales pipeline or the funnel of sales activities that feeds sales into your business. If yours is the type of business where a customer makes an initial enquiry, gets a quote, requests more detailed information and then takes weeks to make a final buying decision your Sales Pipeline will show how much is happening at each of these various stages.
Measuring the levels of “Fuel” at the various stages will help you identify when any activity drops off so that you get a warning light going off before the sales pipeline is empty.
Some common measures would be taken on a weekly or monthly basis:
· How many initial enquiries from customers OR prospecting calls result in a sales meeting
· How many sales meetings result in quotes
· How many quotes turn into orders
· How long does it take on average from first contact to sale
For a retail business the measures might be quite different and are likely to be measured daily.
Understanding these will help you to identify what's "in the tank". For example if you know that it takes you at least four weeks to convert a quote into a sale on average and you've not sent out any quotes in the last two weeks you're facing a problem in four weeks time because you won’t have any “Fuel” flowing through that section of the pipeline.
We know if the car runs out of engine oil we could be in serious trouble but we only get a warning light when it’s very low.
Think of Oil as everything you do in your business to come into contact with your potential customers. This customer contact feeds into the sales pipeline.
For a shop owner this could be dressing the window to attract people inside; for others it will include marketing, PR, networking and every other way of spreading the word about your business. Like the engine oil this can be a bit more difficult to measure but understanding and measuring customer contact whether its phone enquiries, footfall through the door or new contacts you’ve made will allow you to top up before the warning light comes on.
When you’re starting out, identifying the required levels of essential activity allows you to put warning lights in place so that you can act fast if any one area isn’t performing. This can avoid you from being too far down the road when you discover you’re out of fuel or oil.
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