- Hey guys, in this video I'm gonna show you three ways
to build a successful business, let's go.
I'm James Sinclair, I'm a U.K. entrepreneur
and business owner.
I employ over 450 people across 11 locations
and in this video I'm gonna share
with you my three KPI rule, let's find out.
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to six to eight figures and beyond.
So here it is guys, we're goin' through the three KPIs.
These are the three most important things
that I look at in my business.
Number one, you need to produce a monthly profit and loss.
For those of you that are uninitiated,
sometimes these are called management accounts
and they're called management accounts
because they give you a set of instructions
on how to run your business on a monthly basis.
Most people produce annual accounts.
Annual accounts are really good for tax purposes
and looking at a holistic view of a company.
But we want to have a set of instructions
to make better informed decisions
so you need to get in the habit
of producing a monthly profit and loss
and then study it, analyse it
and see what improvements you can make.
How good are your costs?
How good are your turnover?
And look at the profit that you've made
in each and every single month.
Don't be that classic person
that gives all their receipts to their accountant
and the accountant tells them how much profit they've made.
You need to know how much profit you've made,
then you tell your accountant
to make it tax efficient for you.
That's the right way round
and that's what successful people do.
KPI number two is tracking your average customer value
or some people call it spend per head.
I don't care what you call it as long as you're trackin' it.
See the profit is increasing average customer value,
increasing spend per head on the already existing customer
'cause it costs a lot actually to go and get new customers.
You have to market for them,
you have to spend on Facebook ads, or YouTube advertisin'
or Google PPC or direct mail, all these things.
But actually there's more profit in your existing customer.
There's a big phrase for business owners and entrepreneurs,
they want to do the new rather than the successful.
It's far more successful, far more easier
to get your existing customers to do more with you
and my big find with entrepreneurs and business owners
is most customers don't know the full suite of products
and services that you offer.
You spend more time going out and gettin' new customers
rather than looking at the existing customers.
And every year you wanna make sure
that your average customer value
and spend per head is going up as well as your turnover.
There's no point in havin' a high turnover
and a low average customer value,
it really screams out the problems you've got
in your business.
And also you can find so many good customer service things
when you start tracking average customer value.
For example, in my businesses, we own like theme parks
and farm parks and big indoor play centres,
when we're really busy the average customer value goes down
because there might be queues or service isn't good
and it's by looking at this you can track those things.
Number three is the labour ratio to turnover
in your business.
Now every industry has a percentage labour guideline
that they need to hit.
So for example, in care it's 50%
of your turnover is spent on labour,
in software development it could be the high as 70s, 80s
and even 90 percents on your turnover is spent
on people to make the software.
In retail it could be 13%, in leisure and restaurants
and catering it could be 25%.
You need to find out what it is for your industry
and if you're industry is new and unique
and you haven't found out, benchmark against other people
and set a standard percentage
that you want for your business
so that you make sure that your business grows
before you make new hires.
And don't forget,
if you're the business owner and entrepreneur,
make sure that you're adding yourself
and you're working as a commercial salary
for what you would get if you didn't own the business.
So, for example, if you're a restaurant owner
and you're managing your business,
you need to allow for yourself to have a commercial wage
of what you would employ someone else
to do your job going into your accounts.
It really makes you strict at looking
at your labour to turnover ratio in your accounts.
So guys, I really hope you enjoyed that video
and I hope you can take some stuff and invest it
and learn it and implement it into your business
to help it grow.
Now, if you wanna get some clarification
on any of the points,
just put some stuff in the comments below
and I'll do my very best to answer.
Guys, if you've enjoyed this video
and you wanna see me live, I do loads of free events,
all the details of how you can come along to one
of those is in the video description.
Thanks for watchin' the video, really hope you enjoyed it.
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