The 5 Numbers I'd Focus on to Grow my Business

The numbers I’d focus on to grow my business are the numbers I’d want every business owner to know, and ideally be looking at every single week.

I say this from experience.

Like many business owners, I went into business because I was passionate about what I do. I had expertise, ideas and a desire to make a difference.

But nobody really tells you that when you go into business, you’re not just going to spend your time doing the thing you’re good at.

You also have to actually run the business.

And part of that means understanding your numbers.

I’ll admit there have been times in my own past businesses when I haven’t been as across the numbers as I should have been. I’ve learnt some things the hard way.

What I now know is just how much your numbers can tell you.

They can tell you what’s working. They can show you where there might be an opportunity. They can highlight something that needs your attention. And sometimes they can give you an early warning that something has changed.

The good news?

You don’t need to be a numbers expert.

Accounting software has come a long way. Many platforms now provide useful reports and insights, and increasingly AI can help us to learn to understand and analyse our business data.

You can ask questions. Look for trends. Find out what has changed.

But I don’t believe that means we should hand responsibility for understanding our numbers over to an AI bot.

You still need to understand your business, know which questions to ask, and use your own judgement and experience to decide what those numbers mean.

For me, this has become a simple 10 or 15-minute weekly habit. At our last July Better Business Workshop, a member suggested tweaking this routine from Friday afternoon to Wednesday morning, and you know what, it actually works much better for me because I am a morning person. I love how we all support each other in our Success Community, including me experiencing the benefits!

Now back to the topic, each week, I look at what’s happening, what’s changed and whether anything looks different from what I would normally expect.

That might be an expense suddenly jumping, a client not buying or paying as they normally do, or margins starting to move in the wrong direction.

Because I’m looking regularly and immersing myself into my business data, I’m much more likely to notice those changes early rather than discovering a problem six months down the track.

So, what are the five numbers I’d focus on?

1. Gross Profit Margin

Before worrying about getting more sales, there’s a more important question to ask:

Are the sales you’re already making actually profitable?

That’s why the first number I’d look at is your gross profit margin.

Essentially, gross profit is the money you have left from your sales after taking away the direct costs involved in delivering that product or service.

For example, if you sell something for $100 and it costs you $40 in direct costs to deliver it, you have $60 left.

That’s a 60% gross profit margin.

Why is this worth knowing?

Because two businesses can generate exactly the same amount of sales and have very different amounts of money left over.

Imagine two businesses each generate $100,000 in sales.

One has $70,000 in direct costs, leaving $30,000 in gross profit.

The other has $40,000 in direct costs, leaving $60,000 in gross profit.

Same sales. Very different outcome.

So I’d be asking:

What is my gross profit margin?

Then:

Is it improving, staying relatively consistent, or getting smaller?

If your margin is falling, it’s worth investigating.

Maybe your costs have increased. Perhaps a supplier has put their prices up. Maybe you’re discounting more, you’ve underpriced something, or some of the products or services you’re selling are simply less profitable and need reviewing.

Instead of automatically thinking:

I need more sales.

Try asking:

Do I need more profitable sales?

Imagine generating another $50,000 in sales that produces only $10,000 in gross profit, compared with $50,000 in sales that produces $30,000 in gross profit.

Same additional revenue.

Very different result.

Even when your gross profit margin looks healthy, you can still have problems elsewhere in the business.

So the second area I’d look at is your operating expenses, particularly anything unusual.

2. Operating Expenses: Particularly Anything Unusual

Sometimes the numbers that deserve our attention aren’t the big, obvious ones.

They’re the things that have quietly changed.

Your operating expenses might include software, contractors, wages, rent, insurance, marketing, professional fees and subscriptions.

I’m not suggesting you need to go through every transaction or line item each week.

Instead, look for what’s different.

1. Has your software spending suddenly increased?

2. Have you added three new subscriptions?

3. Has your advertising spend gone up?

4. Are your contractor hours increasing?

5. Has a new expense appeared that you weren’t expecting?

And the question isn’t necessarily:

What can I cut?

It’s:

Do I understand why this expense has changed, and is it actually helping my business?

Let’s say you have an expense costing you $1,000 a month that you’re no longer really using.

That’s $12,000 a year.

You might not need to find another $12,000 in sales.

You might simply need to make a better decision about where that $12,000 is going.

On the other hand, an unusual expense isn’t necessarily bad.

Maybe you’ve invested in a new system. Perhaps you’ve hired someone. Maybe you’ve increased your marketing because you’re preparing for growth.

The question is:

Do you know why the expense changed, and does the result justify it?

3. Your Highest-Value Clients

Once you understand where your expenses are going, there’s another useful question to ask:

Who is actually generating the most value for your business?

And I’m not just talking about the client responsible for the biggest invoice last month.

I’m talking about the clients creating the most value for your business over time.

That could be based on revenue, how long they’ve been with you, how frequently they buy, whether they refer your business to other people, or other forms of value that are important to your business.

Have a look at your clients and rank them by revenue over, say, the last 12 months.

Who are your top five?

Who are your top 10?

Then ask:

What do these clients have in common?

• Maybe they’re all from a particular industry.

• Perhaps they came through the same marketing channel.

• Maybe they tend to buy multiple services.

• Perhaps they’ve been with you for a long time.

• Or do they have a particular problem that your business is especially good at solving?

Let’s say your top 10 clients generate $200,000 of your $300,000 annual revenue.

That’s useful information.

Because now you can start asking:

What is different about these clients?

And:

How could I find more clients like them?

You don’t necessarily want to clone your clients, but understanding what makes your highest-value relationships valuable can tell you a lot about where your business is working particularly well.

Instead of only asking:

How can I get more clients?

Try asking:

Which clients are creating the most value in my business, and why?

Knowing which clients are valuable is one thing.

Knowing how good you are at turning potential clients into actual clients is another.

That’s why the fourth number I’d look at is your client conversion rate.

4. Your Client Conversion Rate

In simple terms, this is the percentage of potential clients you talk to who actually become paying clients.

Let’s say you have 20 sales conversations and five of those people become clients.

That’s a 25% conversion rate.

When growth is slow, I think our instinct can often be:

I need more leads.

But what if you already have enough opportunities coming into your business?

What if you’re simply not converting enough of them?

Imagine you’re having 20 sales conversations each month and converting five.

If you improve that to seven clients, you’ve gained two additional clients without needing two more leads.

And if each client is worth $5,000, that’s an additional $10,000 in revenue.

Suddenly the question isn’t:

How do I get more people through the door?

It becomes:

How can I improve what happens once they’re here?

There isn’t one magic conversion percentage every business should aim for.

It depends on your industry, your offer, your pricing, the quality of your leads and many other factors.

What’s more useful is knowing your number and watching what happens to it over time.

• Is it improving?

• Is it dropping?

• Has something changed?

• If so, why?

Are you attracting different types of leads? Is your offer clear? Are you following up? Are you speaking to the right people? Is there something happening in your sales process?

Your conversion rate isn’t a judgement of you or your business.

It’s information.

And once you have that information, you can start asking what you could do differently to improve it.

Finally, I’d look at how concentrated your revenue is.

In other words:

What percentage of your clients are generating around 80%, or the majority, of your revenue?

5. What Percentage of Your Clients Generate the Majority of Your Revenue?

This is where the 80/20 principle can be useful.

• It might be 80/20.

• It might be 70/30.

• It might be 90/10.

The exact ratio isn’t the important part.

What matters is understanding how concentrated your revenue is.

Let’s say you have 50 clients, but 10 of them generate around 80% of your revenue.

I’d be asking:

Are we spending enough time looking after those relationships?

And:

Do we understand why those clients are so valuable?

I’m not suggesting you ignore your other clients, but your time and attention doesn’t necessarily need to be distributed equally across every client.

Perhaps there are opportunities to deepen those important relationships.

Maybe there’s another service you could offer them.

Perhaps you could develop an offer based on something they regularly ask you for.

Or simply making sure you maintain those relationships might be important.

But there’s another reason to understand this number.

Potential Risk.

If one client is responsible for a large percentage of your revenue, what would happen if that client left?

Let’s say you have 20 clients, but one represents 30% of your annual revenue.

That’s important information.

It doesn’t mean that the client is going to leave.

But as a business owner, you need to understand what would happen if they did.

• Would you still be able to cover your operating expenses?

• Would you need to reduc

• e costs?

• Would you need to find new clients quickly?

• How long would you have to replace that revenue?

And perhaps most importantly:

What could you do now to reduce that dependency?

Maybe you need to develop more clients in the same market.

Maybe you need to diversify your revenue streams.

Perhaps you need to focus more on business development so that no single client represents such a large proportion of your income.

This is where knowing your numbers becomes really powerful.

Because the number isn’t just telling you what’s happening today.

It’s helping you think about what could happen tomorrow.

Of course, these ratios and scenarios will differ depending on the type of business you run.

Which Number Does Your Business Need You to Pay Attention To?

So, which of these five numbers do you need to pay more attention to right now?

1. Gross profit margin

2. Operating expenses; particularly anything unusual

3. Your highest-value clients

4. Your client conversion rate

5. What percentage of your clients generate the majority of your revenue

You don’t need to have all the answers today.

You don’t need to become an accountant.

And you don’t need to spend hours buried in spreadsheets.

Just start looking at the numbers.

Ask yourself what they’re telling you and then use that information to make one better business decision this week.

You might even find, as I have, that those 10 or 15 minutes each week become something you actually look forward to.

Because you’re no longer just running your business.

You’re really paying attention to it.

Ready to Take the Next Step?

If you’d like to learn the process I used to start my own business and get my first four coaching clients within six weeks, I’ve put it together in my free roadmap, Next Level Success.

It takes you through the steps I followed to move from having an idea to actually building my business and getting those first clients.

Get your free Next Level Success roadmap at askfleur.com/next-level