Decision makers love statistics. If you're the general manager of an NHL team and your job is to find the next Sidney Crosby, you want to show up at the draft with all the statistics possible for each player you are considering: number of goals, assists, penalty minutes, plus/minus ratio, playoff performances.
Prospective buyers of your business will also need to see your statistics. And sales is among the most important. Buyers will want to understand your secret for getting customers and at what rate you turn prospects into customers. That will help them see how much your business is worth in their hands. The key is to have a long-term track record of statistics you can point to, so start tracking the following now:
Qualified leads rate
A qualified lead is someone who has the capacity and interest to buy what you're selling, and the qualified lead rate is the number of people you have engaged in a dialogue as a percentage of the total target market. Let's say you own a consulting firm that targets large enterprises in your city. You estimate there are 100 potential customers in the local area that could handle the $250,000 you charge customers for your unique offering. If you win face-to-face appointments with 20 leads, then your qualified lead rate is 20 per cent.
Your close rate is the percentage of qualified leads that you end up closing in a given period. If the consulting firm closed three of the 20 people it met with, its close rate on qualified leads is 15 per cent.
Most business owners know these stats in their head, but it's important to start documenting them regularly so you can point a potential acquirer to historical patterns. A prospective buyer will take your stats and project your performance onto his or her footprint.
To continue the hypothetical consulting firm example, imagine that a large global consulting firm with 27 offices that collectively target 3,000 large-enterprise customers is considering purchasing your business. It is going to graft your qualified lead rate and close rate on its 3,000 businesses. If it too is able to win face-to-face meetings with 20 per cent of 3,000, it is likely to get 600 qualified leads. If it too is able to close 15 per cent of the people it meets with, then it can expect to enjoy 90 new customers spending $250,000 each for a total of $22.5 million. Most companies have a pretty good idea what they are willing to pay to acquire $22.5 million in new business.
Track your sales stats like a hockey player's are monitored, and you'll have a much better shot at getting paid like Sidney Crosby.
Special to the Globe and Mail
John Warrillow is the author of Built To Sell: Turn Your Business Into One You Can Sell . Throughout his career as an entrepreneur, Mr. Warrillow has started and exited four companies. Most recently he transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which he sold to The Corporate Executive Board in 2008. He is the author of Drilling for Gold and in 2008 was recognized by BtoB Magazine's “Who's Who” list as one of America's most influential business-to-business marketers.