America’s Leadership Expert : Big Number
Clay Staires: This is Clay Staires America’s Leadership Expert with Tulsa Business Leadership and podcast number 40, Leading By The Numbers. What are your three big numbers? As Clay Staires, with Tulsa Business Leadership, I get the opportunity to speak with many entrepreneurs and business owners across the country and talk to them about their business and about what they are trying to achieve as their business becomes a vehicle to create financial freedom and time freedom for them. Unfortunately, so many, I find so many as Clay Staires’ Tulsa Business Leadership, of these business owners and entrepreneurs find themselves just going to work every single day, trying to get clients, trying to make the money that they want to make, but they don’t know exactly what those numbers are. I remember being in the same place before I started Tulsa Business Leadership. I was in this place of I just know I needed to make money. I didn’t know exactly how much money. I just knew that I needed to make more money.
What I do at the beginning of each year with our clients, with Clay Staires’ America’s Leadership Expert Tulsa Business Leadership, is we set up the three primary numbers that are going to drive our activity throughout the year. What I call these are what are your toughs? What are your ultimate, the ultimate, few? What we have here, number one, is with leading by the numbers, we want to know what is the total revenue goal for your year? With your company, what is that big number that you are looking for? The total revenue is the gross revenue that you are making for the year. You can take this gross revenue from the prior year of what you made and it can be a percentage of increase if you would like, or if you know that you are going to have some new sales effort or some new event that you’re going to do, you can set your goals according to that. But again, the first number that we want to have is how much money do you want to make? Okay? That’s going to be important number one.
The next thing we do with Tulsa Business Leadership, with our business owners and entrepreneurs, is after we have our total gross revenue goal, we move to the total profit margin. This would be simply how much money we want to keep. How much of your revenues do you want to keep? Remember, your business is a vehicle to create financial freedom for you. It’s one thing to make money with your company, but it’s a very different thing to keep money.
I found that through my journey, America’s Leadership Expert I discovered that even though I was making more and more money through the first five years of Tulsa Business Leadership, we continued to double and then double and then double. We continued to double it but I found, because of a mindset, I found that even though I was making more and more and more money, I still didn’t have the money that I wanted. I still wasn’t keeping money.
This is a whole different concept of being able to keep money. The idea is once we have identified the total revenue goal, next thing we need to do is how much of that total amount of money that we made do we want to keep? We call this the profit margin. Obviously, it is the gross revenue minus the expenses that we have had. What is that percentage or what is that margin that you would like to create?
Then finally, number three, the third number is how many transactions are you going to need to make during the year to meet that goal? To meet your revenue goal, based on the average fee per transaction, America’s Leadership Expert whether it’s a restaurant, whether it’s a number of clients as a plumber or a carpenter, whether it is an insurance company, how many transactions do you need to have to meet that revenue goal?
It was really something. In doing this with a client that I have, recently, with Tulsa Business Leadership, we discovered that their gross revenue goal that they wanted to hit in a certain year, it was going to be impossible for them to hit because their store wasn’t big enough. They weren’t able to move enough people through that store to hit their ultimate goal. It was really something to see that huge eyeopener for them as they realized that they needed a bigger space if they actually wanted to hit that ultimate goal to have the business that was going to create the financial freedom and time freedom that they were looking for. It was a wonder time for them. It wasn’t depressing. It was a wonderful time of revelation, of, “Oh my gosh. I have been wanting to hit this goal but the company that I have right now is not going to do it. I’m going to have to be able to create a larger business model.”
With Clay Staires America’s Leadership Expert and Tulsa Business Leadership, again, theses are the three numbers that we have found that are so important to help people create the work. Once again, there are other numbers to track, but these are what I call the big three or the ultimate few. The idea here is from these three numbers, these three numbers begin to drive the activity. I call these three numbers … These are like the lag numbers, the lag measures. It’s the outcome of the work.
But from these lag numbers, we can now come in and talk about our lead measures, activity that we need to do to make sure that we reach this ultimate revenue goal, activities that we need to put into place to make sure that we have the profit margin that we are looking for, and activities that we need to do to make sure that we have the proper number of transactions to meet the revenue goal.
I was just talking with one of my clients with Tulsa Business Leadership this morning and we found out that we can either increase the number of transactions or we can increase the amount of money per transaction. One of the things that I loved about this as the light bulb went on in their head was, “Clay, what if I increased the number of transactions and increased the amount of money I was making per transaction?” Hey. Now we’re talking about the ultimate place where we want to be. We had a wonderful time talking about these numbers as they began to get these things set. Now they have measurements on a daily basis of the ultimate revenue goal, the total profit number, and the number of transactions that they needed to have to reach their goal.
This is something with Clay Staires America’s Leadership Expert and Tulsa Business Leadership that I want to encourage you with your business. Do you know your ultimate few? Do you know your big three numbers? This is going to be something important for you to come up with. This is Clay Staires with Tulsa Business Leadership, with podcast number 40, Lead By The Numbers. What are your big three?