Building Financial Data Collection Systems

The most important thing you can do now to fetch an appreciable market value for your company when you eventually exit the business is to begin assessing the current market value. By setting up data collection systems and doing this regularly, you can identify the best opportunities to increase the appeal your business has for investors.

Having an easy-to-interpret model to display important Key Performance Indicators and market opportunities makes developing strategies for growth nearly automatic. Tracking KPI’s helps you understand where you can reduce costs and increase opportunities by improving the effectiveness of your production, sales and marketing. Analyzing your market, meanwhile, illustrates the best external opportunities for growth.

An obvious place to start making changes will be any area where you can apply holistic strategies to improve internal operations (reduce costs, improve efficiency) and simultaneously capitalize on market opportunities. For example, you might find that your cost-per-lead or cost-per-sale is higher than you’re comfortable with. To address this, you could look at your marketing engine, your sales approach, or even your production (is there too much machine downtime? Are delivery costs unreasonably high?)

These are the improvements that are going to give you the highest return on the time and energy you invest into them. Of course, there will always be smaller, easier tweaks you can make, and these are equally important, especially as they accumulate. Investors are going to be look at all of it, so you need to look at all of it, too.

This can seem like a labor intensive task, especially when you look at an overview of specific KPI’s  and realize how many there really are. Truthfully, it is a monumental task, and its important that you realize this, because a little bit of urgency is exactly what you will need to get a price for your company that makes you happy to walk away.

Starting now means you have lots of time to tackle this work, which means you can handle it without compromising your current responsibilities. This will make the process easier and more enjoyable, and lead to better results.

Use your existing systems

You probably already have systems in place. For a good look at your internal operations, pull Key Performance Indicators from your accounting. Set up the chart of accounts so that you can run reports that will show the results that you (or investors) want to see. You’ll definitely want to see revenue broken down by region, so put region into the chart of accounts.

What really matters is understanding the categories that are most important, so you can run reports that will help you identify areas of weakness — aka opportunities.

To gain insight into where your best external opportunities for growth are, turn to your sales and marketing people. If they’re already canvassing areas and identifying qualified leads, all you have to do is find a way to model their findings in a comprehensible format that is accessible to everybody.

Improve your data collection systems

Build upon what you already have in your financial reporting by attaching more information to each transaction, like who the customer is, transaction date, transaction amount, product/item purchased. Make logging these details standard operating procedure, and the extra few seconds it takes will offer a great return.

The more information you can record, the better. Ask yourself what will be useful in helping your team identify trends — and create better ones. We recommend a comprehensive breakdown by demographic, like geography, company size and consumer age group. We’ll link you to our overview of KPI’s once again here.

For effective market analysis, think about what your people need in order to understand who their ideal customers are. You want to invest your resources into the most highly qualified leads. You also want to understand the cost of competing for those leads, and of servicing them. If delivery costs are higher at the edge of your service area, you’ll want to prioritize qualified leads closer to home. This could change, though — if the nearby prospects are already being serviced by a competitor, and have little incentive to change suppliers, pursuing them could cost more than delivery costs.

When it comes to identifying the best opportunities for growth, you’ll want to break down your data collection into specific categories, so your sales and marketing team are talking to the right audience. Ask yourself how you can build a picture of the following:

  • Saturation of market, and how much room there is for new players
  • Ease of entry into said market
  • The share of the market you currently control
  • Competitors currently in the market and coming to market soon
  • Strengths/weaknesses of competitors (brand, pricing, offerings, etc)
  • Your ability to compete in the market (and in sub categories such as age group) and win share
  • Overall go-to-market strategy and alignment with target customer buying habits (plus amount of success, regardless of theoretical alignment)
  • Pricing model and alignment with buyer’s willingness to pay
  • Price vs method to buy (online, in person, sales rep)
  • Impact of a more mature marketing & sales engine to accelerate sales, plus potential for cross sell, or penetrate target customers

This is work that your sales and marketing people are already doing. Just find ways to make the reporting more detailed, accessible to all, and easy to understand. That way, there’s very little extra work required for you and your people to set effective goals. The target is right there, for everybody to see. All that remains is to come up with strategies to close in on it.

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