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Small Business must measure, measure, & measure!

It has been said that if you can’t measure it, it can not be managed.  As a small business, you should be measuring several aspects of your business operations and two of the more important ones are client conversion and true cost of a new client to your business.

For instance, how many new customers did you have last month?  There are many successful ways to generate leads, but unfortunately, it’s the follow through where most small businesses fail.  Here is a small business client conversion ratio:

If your business generates 100 leads a month, and only one new customer is the result, your conversion rate is one percent (1%).

Now add up the true cost of acquiring that customer – cost of generating the leads per month, man-hours for developing proposals and brochures, printing cost of brochures, mail, telephone calls, advertising costs, travel costs, etc.  This cost is the customer acquisition cost.

Now you have two measurements for measuring lead generation:
1. Number of new customers per month versus leads generation
2. Acquisition cost for each customer

Monthly, you can review these two measurements to give you a snapshot on how well you are improving:
• the number of leads generated
• how many new customers you have
• how well you sales team or you are closing each lead
• how much each new customer costs
• and hopefully, that the sale generated is profitable in regards to the revenue generated from the new customer.

Now you have a numeric basis for measuring leads and customer acquisitions.

If you feel like you need some help with your "number", don’t hesitate to contact our business accountants Perth team. We are here to help!

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Paul Baggetta is the Founder & Principal of Baggetta & Co (ABN 68 786 233 813).

Paul Baggetta has been a Taxation Accountant since 1981, a Financial Planner since 1998, and in 1993 qualified as a Real Estate Licensee, holding a Triennial Certificate (currently not trading) and operated his own Real Estate business for property investment clients for over 5 years as a second business.

Financial planning services are provided by Paul Baggetta as an Authorised Representative (No. 261469) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. Australian Financial Services License No. 223135.


Taxation & Accounting services are provided by Paul Baggetta as a Registered Tax Agent (No.61487008) and is a Member of SMSF Association, FIPA & NTAA.