You know you need to project a sales forecast, and create a budget, and then compare your actual revenue and expenses to what you guessed you’d make, and what you hoped you’d spend.
But what about comparing your business’s performance to other, similar businesses, and how they did last month, or last year, or last quarter? It can be a pretty easy way to diagnose problems you’re having—maybe the reason your sales revenue is so much lower than you’d forecasted is because you spend 25 percent less on marketing than the average company in your industry, or because you have 20 percent fewer employees.
In this episode of #TrackThis, Matt Rissell, CEO of TSheets, and I discuss industry benchmarking and how it’s helped us grow, as well as some cool employee time-tracking options that can improve your management skills.
The video is above, and the full transcript is below:
Caroline: Welcome, everyone, to the second episode of the Track This video session with Sabrina Parsons, CEO of Palo Alto Software, makers of LivePlan, the number one business planning and management app on the market, and also Matt Rissell, the CEO of Tsheets, the number one time tracking and reporting app.
This is about small business tracking tips from two CEOs who are running two very well run companies where everything is about tracking. They’re going to start sharing some tips with you.
First, we have Sabrina Parsons, CEO of Palo Alto Software.
Sabrina: Thanks Caroline, and thanks to Matt for joining me on our Track This. It’s been fun to work with TSheets, and really love the ideas that they have behind their time tracking and just how Matt approaches tracking everything in his business. Because that’s really how we approach our business. It’s great to work with a company that has a similar viewpoint.
I also think it’s why we want to do this. We want to share with small businesses different things that the two of us are doing to keep our business on track. Because you guys who are small business owners know it’s hard. It’s a battle every day, and most of the time we all feel like we’re just putting out fires.
At the end of the day to grow your business you’ve got to get beyond putting out fires. You’ve got to work on the business and not just in the business. That means you really have to know what to track, how to measure it, and then how to make adjustments.
My tip this week on tracking is on industry benchmarking. Basically, when I go and look at metrics for Palo Alto Software and how we’re doing I want to know how we’re doing compared to my plan, compared to how I did in the past.
But, I also want to know how I’m doing compared to other businesses in my industry. Because it helps me understand where there might be a lot of improvements to make and where maybe I just can’t improve any more, I’m at the top of my game.
You can see on the screenshot, in this particular benchmarking screenshot, this company’s spending six percent of revenue for marketing. The industry’s spending 12 percent less. So, they’re actually doing pretty well. Maybe they’re spending too much. Maybe this is a place the CEO has to go in and look at and maybe dial down the expenses.
On payroll it’s 11 percent of revenue. They’re actually down compared to the industry. So, maybe they have to look at that.
It’s really about understanding how you’re doing. Maybe your sales per employee are better than everybody else. That’s great, but maybe that’s also why you’ve been feeling that you don’t have enough people on the floor dealing with your customers. Because actually you don’t, and everybody else in your industry has more employees compared to the number of sales you’re making every month, every quarter, every year.
That’s my tip on what to track. I’ll pass it on to Matt.
Matt: Well, I tell you, that is absolutely essential. We just found out recent information, Sabrina, where we got conversion ratios from a leader in our industry. We found out we were doing really well, but it was going to be a strategic focus for 2014. Most likely, we would’ve been trying to squeeze blood out of a turnip. So, I think you’re exactly right.
Sabrina: Thanks Matt. Yeah, no, I love that story about you guys actually going out and finding what other people are doing. That’s exactly what I’m talking about. This is why I like to work with Matt. They’re really going out there and understanding their metrics and focusing on metrics they can change. That’s what the industry benchmarking is all about.
Matt: For TSheets, our lesson or time tracking tip for this month is getting insights into who’s working, what they’re working on, and how long they’ve been working on that project. It’s called the Who’s Working window specifically that we have. It’s out of our product. It’s unbelievable.
The practical tips are most business owners, you’re not always in the office. You can’t be at every location. You may want to know who’s actually at the store today and did they open it on time.
Well, from anywhere in the world, you could be sitting at home, at an airport, or another country, and see, again, who’s working and what time they opened up the store.
Another practical example is especially with development teams. When you have people that are in development they do not like to be interrupted, as you probably know. I can look and say oh should I go interrupt Brandon right now. I’m going to look at the Who’s Working.
Oh, he’s clocked into development. Yeah, not going to do it. I’m going to wait until he’s clocked into, say, a management job when I know he’s more flexible into being interrupted.
It’s a very powerful tool to help you build your company, communicate effectively, and provide efficiencies.
We, too, absolutely love working with LivePlan. There are so few business to business software as a service companies that are successful just by popular belief, and they’re one of them at the very top notch. We are pleased and, Rhonda, I’m not saying that just to pander. Unbelievable company. If you get a chance, make sure you follow #mommyceo for tips.
Sabrina: Thanks so much, Matt. I do have to jump in and say that kernel that Matt really tells you about understanding what your employees are doing no matter where they are is going to really help get productivity up for your company. Even just simple things like having shared calendars help productivity. But, actually knowing what they’re doing and deciding not to interrupt them when they’re doing something critical is fantastic.
Matt, I want to make sure that we’re doing that with our development team, so thanks.
Matt: Absolutely. Caroline, do we hand it back to you?
Caroline: Yes. I wanted to thank everybody for listening in to the second episode of Track This. Again, you can tweet us @LivePlan or @TSheets. Thank you everybody.