Traditionally, you “run the numbers” in a business to determine if a proposed deal makes sense, that is, whether it can be carried out profitably to both parties. Sometimes, you run the numbers to look more deeply into another element of a business, such as progress toward goals. I believe it is critical to put business numbers into an Excel chart so you can see a picture of how they compare to each other and to your targets. Most of us cannot “look at numbers” accurately in our head.
A Client Acquisition Example
Earlier last year, one of my clients was talking about his progress toward meeting his 2010 goals. What he said was, “I’ve signed 68 clients so far this year; I’m about one quarter of the way toward my target of 500 by the end of the year.” It was April, after taxes. My mind was building the spreadsheet before we walked out of the meeting. I knew he was NOT on target, but that meeting wasn’t the right place to say anything.
I went home and built a spreadsheet, and then created a chart in Excel from the numbers. (Right-click on the chart below and select “open in a new tab” to see a bigger version.)
Chart showing progress toward annual client acquisition target, and work needed to meet goals.
From the chart, you can see that the businessman needed approximately 50 clients a month to reach an annual target of 500 new clients. (It’s a slow business in November and December and we’d allowed zero new clients after October.) He had signed 24, 22, and 22 clients respectively, in the first three months of the year. It’s not quite clear how the math of “68/500 = on target” happened, but it’s not unusual for math results to “go wrong” when we try to track numerical outcomes in our head.
When I showed him the first version of the chart, he sighed. He wasn’t surprised that his internal tracking was off, but it was disappointing to see by how much. Then, he said, “What would be really helpful is to see how many events I need to book to catch up.” In this business, the primary client-acquisition activity is a 20-person information session. He wanted to know, “how many of those did he need to schedule and fill?”
I went back to my spreadsheet and made some adjustments. I added a column to count the new clients I was certain he’d get anyway, simply because the doors were open. Then, divide “Gap (cumulative) / 20,” and change the axis and data label so that the “number of events” displayed as a point, rather than a bar, and return to owner.
Projected results based on anticipated client aquisition success
Eight full events is five more than he has ever filled in one month, and not a sustainable pace for the business.
I gave him the spreadsheet and the new chart. The cells in peach in the data table are projections, used to determine what would happen if he were able to sign different numbers of new clients. I’m not sure this part mattered. The important information had been conveyed in the first presentation: 68/500 is not 1/4 of the way to goal.
Data for Excel charts on this page
The point of this article is not to discuss one business owner’s efforts to get back on track, although he did change his plans for the remainder of the year when it became clear they would not be realized. The truth is, we don’t do numbers well in our heads. Seeing results in an Excel chart provides a picture of reality that’s very different than the one we create in our mind.
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