Your Business as a Machine - Part 1
In order to make sense of, lead, and manage your business, you need a way of understanding it; a structure for how it should function that you break down, measure, train others on, and improve. We call this model your “Business Machine.”
If you were the Jolly Green Giant and walked up to your building and took the roof off to look down and see how the business works, these are the functions you should observe working together to produce the end result – happy customers and a profit.
Referring to the Business Machine Chart, you see seven “gears,” representing the seven different functions of your business. This particular machine (chart) is how a Home Improvement Contractor should work, and is the structure we use at Attic Systems to help our dealers to great success.
Each gear’s size is depicted in relative importance to your business. As you can see, the Sales and Production gears are the biggest, because without sales there is no business, and without Production there is nothing to sell.
In a series of 4 articles, we’ll discuss the how this model for running a successful home performance business works and each function in more detail.
As you can see, each gear has a function and output:
What the department is supposed to produce and send to the next function or department. Each gear has a manager; the person who is responsible for that function. No matter how small your business is, someone has to be in charge of the function and the management of the other people in the department. Each gear has KPI’S, or “Key Performance Indicators.” These are the numbers you need to keep track of to measure the department’s performance. You have to be able to measure in order to know, compare, and improve results. There are many KPI’s you can track and study, but the main ones listed are where you start.
At the top of the machine we start the business process with an investment in advertising. We make this investment into the first gear, the marketing department. The KPI’s for the marketing department are Number of Leads Generated, and Cost per Lead. The Output of the Marketing Department is leads. Who do these leads go to? The next function – the Appointment Center.
The Appointment Center, like all gears, has a manager. The Business Machine Chart has a place to write each manager’s name on the gear. The KPI for the Appointment Center is the percentage of leads that get scheduled into a sales appointment – the higher the percentage the better. you are at maximizing your marketing investment. It is likely that the Appointment Center will also schedule Service Appointments for your company if you have a service function, as well. The output of your Appointment Center is Scheduled Sales Calls. This output goes to the Sales Department.
The Marketing and Appointment Center gears need to operate in synch to help turn your investment in marketing into revenue. For example, the Appointment Center is charged will filling all the sales “slots” you have available each week. The number of slots equals the number of sales people you have times the optimal number of calls you want your sales people to make per week. If you have 3 sales people that can make 2 calls per day, you have 30 “slots” (2 calls/day X 3 salespeople X 5 days/week) where you want your sales people in front of customers. Empty slots don’t generate sales revenue.
If you convert only 75% of the leads your marketing efforts generate into filled slots, you will need to generate 40 leads each week. At 90%, you need only 34 leads! Measure and work on how ell you’re doing at converting leads to appointments! We’ve learned over the years that how well the Appointment Center operates can have a dramatic impact on your business results.
Next month we’ll discuss the sales and production gears and how they interact together and with the other gears in the Business Machine model.