🎙️Show Notes for Episode 044 of the IC Podcast

Jan 13, 2022
 
 
Most consulting businesses track financial metrics around revenue growth and profitability. These metrics tell you what your cash flow looks like and how successful you are in terms of growing revenue but this is not the entire picture of your business health. Cash flow is a lagging indicator.

As a business owner, you want to track a range of metrics, including leading indicators. You also want to take a deep dive into the metrics that correspond to your quarterly focus area. (e.g. lead generation metric, sales metrics, etc)

There are four metrics that really matter and are your path to increase your impact, income, and flexibility.

Listen in as I share what these metrics are and exactly how they are impacting your bottom line: 
  • [03:35] The first metric to consider
  • [05:19] The second metric to consider
  • [08:17] The third metric to consider
  • [09:22] The fourth metric to consider

PUT THIS EPISODE INTO ACTION —

Ready for help figuring out how to leverage these strategies in your IC business and ultimately double your revenue without working more? 
  • I invite you to book an IC Success Blueprint call with me.
  • On this call, we'll dive into your business and get clear on your goals and challenges and determine an action plan for you so that you can create the business impact, income, and flexibility that you desire. 
  • To get on my calendar, please visit https://www.melisaliberman.com/ic-blueprint.

ADDITIONAL RESOURCES —
  • Click here to access my Independent Consultant’s Toolkit
  • Click here to listen to EP. 043  Make Achieving Your Yearly Plan Inevitable

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FULL TRANSCRIPT
 

**note: This is an automated transcript, so please ignore spelling errors and grammar mistakes*

 

00:02

Welcome to the Grow Your Independent Consulting Business podcast. I'm Melisa Liberman, a fellow IC and business coach. On this podcast, I teach you to become a consistently booked independent consultant without becoming a pushy salesperson or working 24/7. If I can do it, you can too, listen on to find out how.

 

00:28

Welcome back to the podcast, I'm so glad you're here because we're going to talk about something so important today, something that can really impact your bottom line. And I can't wait to share this tool with you so that you can start making more money. The tool is essentially what are the business metrics that you should be tracking for your consulting practice? What are the metrics? What does the dashboard need to look like in order for you to drive out more efficiency, which means working less making more in order for you to drive out more profitability, and in order for you to continue growing in your consulting business. So that's what we're going to be talking about today. And what prompted this, for me is really thinking back to some of the shifts that happened in my business, you know, after I first started consulting, to get to the point where I have been able to double my income year over year. The reason why this came up is I was talking with someone yesterday, I'm going to be speaking at their conference, and they asked me some of this backstory, and it really got me to thinking about what did shift for me what made the difference to go from making, you know, $16,000, a year to 32 to, you know, keep doubling that year over year over year. And so, what I want to share with you today is what that change was, what the change was, is essentially I had been for a long time looking at the lagging numbers. And by lagging indicators, those lagging indicators, right, you might be doing this to really focused on how much money was coming into my bank account. That was the only metric I was tracking how much money was coming into my bank account after I signed a client. And did that hit a certain number, that goal that I had set. And quite frankly, the goals are pretty low. The reasons were the goals were low, the goals were low, all of it was low, because I had a low self-concept about how much I could make, especially, you know, juggling family and business. And so, the only metric I was really looking at is really a lagging indicator, right? How much money was coming into my bank account on a monthly basis. And did that meet this minimum number that I had created for myself mentally. And so the shift that occurred for me is that I started looking at the leading indicators, the leading indicators of my business, and tracking those metrics as well, to continue moving up the ladder in terms of how much money I was making, while not also sacrificing the work-life balance that was and is so important to me. So I'm going to share with you what some of those leading indicators are, and how to map this out for you in your business so that you can start making more money and start having those breakthroughs like I have been in order to double the money that you're bringing in and still work according to whatever schedule you want to make. So that's the dashboard process that I'm going to share with you today. The first thing that I want to encourage you to do is to choose a focus for this quarter. What is your focus for the quarter? Is it increasing the value of your pipeline, because you know that you're on a project right now, for example, you want to increase the value of your pipeline so that when you roll off that project, you know later in the year, you've got a lot of opportunity in play. Or perhaps your focus is to increase your pipeline so that you can start bringing on team members working under you to create more revenue that you're driving but not actually having to deliver. What is your focus, your focus might be on increasing your close percentage, maybe you have a lot of deals in your pipeline, but you're not closing them. Maybe that's your focus for this quarter. Perhaps your focus for the quarter could be looking at your profit margin and increasing that. So, look in your business and ask yourself first and foremost, what is my focus for this quarter? What is the one thing I want to dive into deeply in my business that's going to make an impact. And of course, we could all dive into all the things, right? It's so tempting. We want to fix all the problems as consultants, but what I'm encouraging you to do is choose one area. Don't neglect all the other aspects of your business of course but choose one area that you really want to dive deep on this quarter, so that it can move the needle for you in your business. If you need some more help on this, go back to Episode 43, where I talk about how to make your goals inevitable. There's a lot in there that will help you to set up the structure with making a focus area for the quarter. So then ask yourself after you've chosen that focus area for the quarter, what are the metrics that support that? What are the metrics I need to be tracking to support that focus? So, for example, if your focus is lead generation, you might want to be tracking how many leads does it take me to create a prospect? So how many conversations or how many people do I need to talk to, in order to turn that into a prospect? And it could be I talk to someone and they become a prospects? Their company becomes a prospect. Or it could be I talk to someone, and they introduce me to someone who becomes a prospect. They refer me to someone who becomes a prospect. So, think about it from that regard. So the metric if you're focusing on lead generation could be how many of those conversations does it take to create a prospect? Another metric you might consider if you're focused on lead generation is, how many leads do I get if I host an event, maybe you host an executive roundtable, maybe you host some form of a webinar, maybe you speak, you know, at a conference, when you do those types of activities, if that's part of your lead generation method, how many leads come from that. So those are a couple of examples, you'll have to apply it to your business, but really to look at the health of your lead generation process. And if you don't have these numbers yet, which quite frankly, most people don't, no problem, pick the metric, the one or two metrics that you want to track. As it relates to, you know, whatever your focus area is, in this case, we're talking about lead generation, pick your one or two metrics that you want to track that, you know, will help you to see what the health of that process cesses, your lead generation processes, and then start tracking them, create a baseline for yourself, figure out how you're going to measure them. Don't overcomplicate it, I've done this too. This is a side note, a warning. You know, I've spent a lot of time implementing CRM systems and you know, all sorts of different tools to track this kind of thing. And that might make sense for you after you have it dialed in. But don't do that. Now use an Excel spreadsheet. Unless you have some data already flowing through your business that it makes sense to somehow productize this process, I highly suggest you just use a simple Excel spreadsheet until you can figure out what your methods are, how you calculate them. And then you can start thinking about automating them. Okay, so that's what lead generation might look like. How many conversations is it take to create a lead-by type of conversation? So if it's a direct conversation versus referral type situation, how many leads can I create from the different types of marketing events? I do? Those are a couple of examples for you. If you are working on sales focus for this quarter, you might consider what is my average sales cycle length? What is the average close rate that I've got right now? And why? What is the average dollar amount per lead that closes. So looking at those types of metrics, to again, figure out what are the leading indicators for you and your business, so that you can turn those into actionable strategies to improve those metrics and those numbers for yourself and ultimately improve your income. You may be focused on the financial side of your business, maybe you don't have a good handle on the financial side of your business. And you want to make that the focus for this quarter, you could be looking at things like profit margin, you could look at things in terms of how quickly you get paid, could be another metric in the financials bucket, right? You're not getting paid until three months after you do the work because of your payment terms. That could be another area where you would start tracking this on your dashboard and start doing the work to improve that metric. And then the fourth bucket you might consider is on the delivery side. So looking at metrics on the delivery side, if that's the area of your business that you know needs the most attention right now in this next quarter. So for example, you could be looking at utilization percentage, you could be looking at average bill rate by type of work that you do, depending on you know, the volume of projects that you've got going through your business, you could be looking at what types of clients are more profitable than others. So these are the four buckets that comprise your dashboard. So if you focus on one of them this quarter like Legion integration or sales or finances, or delivery, and you dive deep into creating yourself a dashboard for that one focus area, get really good at figuring out what the metrics are that make the most difference, those leading indicators, understand the process by which you're going to capture and track those metrics. And then ultimately use those metrics to start making an impact and changes in your business to increase your profitability to increase the amount of income you're making, to get a better handle on how much you're working, and drive that into your ideal schedule versus the schedule driven by your clients. So those are the four quadrants of your dashboard, again, lead generation sales, financials, and client delivery. If you focus on one per quarter, you'll have this whole dashboard built out by the end of this year. And at the same time, you'll be constraining yourself to make sure that you're really focused on what's going to move the needle in your business for the coming 12 months. So I encourage you to go put this practice into place a new dashboard for you so that you're not just tracking that money coming into your bank account, that you're really building out a command center or a dashboard for your business that you can use to run your business in a really buttoned-down business owner minded way. So that's what I've got for you today. It's a quick one. But go put this work into action, so that you can start making more money so that you can start having more control over your own schedule your own time, and ultimately making a greater impact for you in your business and for your clients. And in closing, I would love to invite you to schedule an IC Blueprint Session with me, we will apply this to your business so we can dive into your specific business, figure out what's going on right now what your goals are, and ultimately what the gap is to get you from where you are to where you want to be. So that would look like figuring out that focus area for you what should be the focus area for you for this next quarter, that will make the biggest difference. And we'll map out the plan for that so that you've got exactly what you need to be focusing on that will make the biggest difference, you'll understand what your obstacles are to addressing that gap. And then ultimately, what then step by step plan will be for you to get from where you are now to where you want to be. So that I see Blueprint Session has been incredibly valuable for the people that I've worked on it with, according to them, and really help them to get clarity on what their plan should be for the coming 12 months, and how to drill that down into a focus for this quarter, and some very clear action steps. So if you want to grab one of those icy success blueprint calls, go to I see the two letters, I see dash blueprint.com. And you can schedule yours from that web page and get more details as well. So I look forward to seeing you there as well as on the podcast next

 

13:13

week. Take care. Thanks for joining me this week on the Grow Your Independent Consulting Business podcast. If you liked today's episode, I have three quick next steps for you. First, click Subscribe on Apple podcasts or wherever you listen to make sure you don't miss future episodes. Next, leave me a review in your podcast app so other independent consultants can find it benefit to and finally to put the ideas from today's episode into action. Head over to MelisaLiberman.com for the show notes and more resources to help you grow your consulting practice from your first few projects into a full-fledged business. See you next week.

 

 

 

 

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