Early detection system

One of the most difficult things about entrepreneurship is the ups and downs.

Just take a look at my gross monthly revenue over the past two years.

A chart like that has sent many folks back to a “real job” real quick.

While recurring revenue can help stabilize you by giving you a bit of a ‘minimum income’ each month, our income is still unpredictable. Two bad months in a row and you might be wondering if it’s just a bit of a slow period or if the walls are crumbling down.

Planning is hard when things are unpredictable. This week, I’ve been thinking about ways to have better projections in my business. Not only to lessen anxiety but to better plan big purchases, hiring help, and my schedule.

No system will predict things perfectly — and if it’s not easy I know myself well enough to know that I won’t follow through. So what I’ve settled on is doing a review on the number of leads I receive each month.

Based on my data, it takes an average of 32 days from the time a lead comes in to when I close a sale. By measuring my number of leads, I get an ‘early warning’ of what next month’s sales might look like.

Thankfully I’m already collecting this information. Here’s my setup:

• Lead Collection: All new leads come through one of two forms on my website. If a lead comes in through other means (I don’t always make existing clients or in-person connections fill in my forms), I fill in the form on their behalf for record-keeping. This way every project starts at the same place.
• Automation: I have automations that bring this data into my CRM. This captures contacts and records dates (when a lead comes in, when a proposal is sent, when a deposit is made, etc.) This provides a real timeline for projects (which is often longer than my gut suggests) and helps make projections a bit more accurate.

I already review my finances and a few other key metrics on a monthly basis, so I’m just adding my leads to the agenda and I’m done.

My hope is that if I see leads drop one month, I can have a bit of a warning of an upcoming slower month. Of course, one big project can change everything, but this is more proactive than my current reactive approach.

All this is pretty easy to set up on your own, but if you want to get really granular with it, I’d suggest taking a look at Agency X-Ray which will allow you to track everything we talked about here and a whole lot more.