MANAGEMENT • 16 MIN READ

How To Use Numbers To Make Easier, Faster, Better Decisions

“What gets measured gets managed.” - Peter Drucker

Are You Stuck Working “IN” Your Business?

Want to make easier, faster, better decisions? Here’s your secret weapon.
It’s something that over 95% of the entrepreneurs we’ve worked with don’t do well at.

It’s knowing your key numbers inside and out.

Numbers are fact. They are reality. They don’t care about stories or excuses. They tell you exactly what’s going on: what’s working, what’s not, where to focus and what to fix.

In business, numbers rule.

They are your guide to the next level.

When we come into a company or start working with a business, the first thing we ask after the vision and goals is, what are the numbers?

Ninety-nine percent don’t know them! They think they know some of the key metrics or financials, but when we look into it, they are often significantly off. And if you don’t know the numbers, you can’t make objective decisions.

I can’t emphasize this enough. Numbers are at the center of your multi-million dollar business machine. If you want to make your job easier and start making better, faster decisions, let the numbers be your secret weapon.

At 2X, we track a lot of numbers to pinpoint the problems and opportunities to address. But you don’t need to start there. There are two primary ways to think about your numbers.

Part 1: Your Success Formula

Your business is a formula. There are a set of key metrics that drive your business. Once you uncover them, they’ll give you complete clarity on where you currently are, and the key levers you need to pull to achieve your goals.

To make this even simpler, let’s break your business down into 3 areas. We call this your “Value Chain.”

So first, you should identify the most important metrics to track for each phase of your business.

For marketing, maybe your top metric is the number of qualified applications per month.

For sales, it could then be your close ratio of those qualified applications.

And for fulfillment, it could be customer lifetime value (LTV). So, the start of your success formula would look like this:

Then you need to track what those actual numbers are right now. For example…

If you get really intentional and focus on driving the key metrics for each phase one by one, where do you think you could get them to in the next 6 months? Let’s set your targets to achieve for each step.

This will be your success formula. This is what you’re working towards.

Then from here, you’ll be able to track your progress for each metric. Everyone on your team can be clear on what metric to drive, and you can see the impact. Even modest improvements compounded lead to some massive results.

In this above example, with fairly small improvements for marketing, sales, and fulfillment, the business 2.5X’ed their sale value. Plus, they are above the magic $1 million per year rate of $83,333 per month.

This is the power of the machine and Value Chain done right. This approach is priceless.

Part 2: The Top 10 Numbers

The second way to master your numbers is by identifying the top ~10 metrics that drive your business. If you do this, you’ll be well ahead of 95% of entrepreneurs and have more clarity than ever of where to focus.

Those 10 metrics may not be immediately obvious, and they are often different for every business. Sure, some will be similar (e.g. revenue and profit), but you need to figure out what the most important numbers are for your business. Ask yourself:

If I had to make all of my business decisions based on only 10 numbers, what would they be?

You’ll likely want some KPIs (key performance indicators) related to:

1. Profit Numbers

I hate to start with a super obvious one, but this is a must.

Everyone gets held up on Revenue, but I don’t care nearly as much about that as I do about how much you’re taking home each and every month!

PROFIT IS PARAMOUNT.

Questions to Ask Yourself

Do you know your profits?
(You’d be surprised how many don’t.)
If not, let’s start there. You need to understand this even if it’s negative at the moment.

How frequently are you tracking/reviewing your profits?
Are you strategically driving actions each week/month to drive more profit?

Potential KPIs To Track:

Profit ($)
Profit Margin (%)
Free Cash Flow Produced

2. Cash

You’ve no doubt heard the quote:

“Revenue is vanity, profit is sanity, but cash is king.”

And the most important KPI of all?

Cash.

Without it, you don’t have a business. It’s the “oxygen that fuels growth” as Verne Harnish calls it, and it should be at the center of your business.

I get daily text of my business bank account balances just to keep it front and center, and recommend that you do the same.

There can be one hundred stories about what’s happening in our business, but I care about what’s actually happening. And cash is the best picture of reality!

Some time ago I asked Grant Cardone what numbers he’s looking at and monitoring…

Check out his response in the video clip here:

Questions to Ask Yourself

What are 2-3 actions you can do to have a better pulse on your cash position?
Do you separate business and personal expenses? If not, what needs to happen to get this fixed ASAP?
Do you have more than two months of business expenses saved up?
Not related to your business directly, but how is your personal cash position for you and your family? Are you protected if something major happens?

Potential KPIs and Numbers To Track:

Cash Balance
Core Capital vs. Target

3. Numbers Inform Client Satisfaction

I mentioned earlier that your customer should be at the center of your business.

They are the ones that pay the bills and drive the key end results (your wealth), so let’s get them involved.

Want to know what studies have shown to be the #1 indicator of your growth?

Per some business leaders, it comes down to one simple question to your customers:

Would you recommend this company to a friend?

This is the Net Promoter Score question (NPS for short).

It’s one of the key metrics that nearly all businesses should have their own version of.

This was created by Fred Reichheld and is called “The best predictor of top-line growth” because client satisfaction drives so much: more repeat business, happy clients, they pay more, stay longer, send referrals, and more.

Your clients (and fulfillment) drive growth, so track and optimize this… then
leverage that great fulfillment to drive more sales and profits.

Questions to Ask Yourself

Do you have a consistent way of getting customer feedback and input right now?
What points in your purchase and delivery can you insert ways to get this feedback?
What are a few key actions you can take in the next month to improve client satisfaction?

Potential KPIs and Numbers To Track:

Net Promoter Score
Client Results
Case Studies/Testimonials

4. Customer Lifetime Value (LTV)

Very simply, what you’re trying to understand is how you can have a customer that is worth a lot more than what it costs you to acquire that customer. These are two of the most important metrics to drive growth.

Once you get to that point where a customer is worth more than it takes to acquire that customer in your marketing/sales, then it’s a matter of scaling up as many customers as you can get.

So, another top number to track and optimize is the lifetime value of a customer. How much does someone pay you, and what is that profit?

The last two are related to LTV.

Maximize LTV and you then have more that you can spend to acquire a customer, which opens up a lot for your marketing. This is one of our favorite levers to improve quickly at 2X, and it helps drive great growth and a much healthier business.

Questions to Ask Yourself

Have you been tracking the average customer lifetime value?
What are three ways you can easily increase your average LTV that you can implement in the next 30 days?

Potential KPIs and Numbers To Track:

LTV ($)
Average Transaction Value ($)
% of Repeat Customers (%)
Churn Rate (%)

5. Employee Satisfaction / Performance

Very much related to tracking your customers’ feelings about your company and offerings, it’s vital to understand how your employees feel about their role and the company in general.

They are the lifeblood of your organization and one of the pillars of scale.

You want engaged, driven employees who are aligned and clear on the vision and mission at hand. So, we suggest you regularly get a pulse of where they’re at and have that feedback loop.

We measure what we call eNPS (Employee Net Promoter Score) which is the same as the NPS we use for clients, but for our employees. This tells us objectively how they feel about their role, the company, our culture, their pay, etc.

Happy and hungry employees are one of the four key forms of business leverage that we talk about at 2X, so get this feedback and optimize their experience to drive results.

Questions to Ask Yourself

Have you ever tracked employee satisfaction or engagement? If not, start now!
How often are you engaging with your employees and contractors to see how they’re doing, what they need from you to succeed, and ensuring they’re set up for success?

Potential KPIs and Numbers To Track:

Employee Net Promoter Score
Employee Retention

6. Cost to Acquire New Customers (CAC)

One of the most important marketing KPIs is CAC (cost to acquire a customer, or customer acquisition cost.) Again, compare this to the LTV and work furiously to increase LTV while reducing CAC.

A great goal to get to is to be able to acquire customers and break even as quickly as possible.

Then, anything that happens after is pure profit.

Many of our clients are able to drive marketing strategies that have them breakeven in 14 days or less.

That means if they spend $10k on advertising, they’ll get back more than $10k within 14 days.

And their main sales happen after that period, which is then pure profits.

Questions to Ask Yourself

How much does it cost you to acquire a new customer?
How can you buy customers for free (by breaking even asap)?
What is your best repeatable channel to acquire customers that is ROI positive?

Potential KPIs To Track:

CAC ($)
Break Even Time Period (Days)
ROI (% or $)

7. A Leading Marketing Metric (e.g. numbers of qualified leads)

As discussed earlier, the leading metrics are what will drive the end results…

So if your end result of marketing efforts is to drive more sales calls, what are the handful of actions that you can track and monitor that will lead to that result?

For every business, there will be some leading marketing indicators depending on your marketing/growth strategies that can help drive your sales.

These may be things such as: sales leads contacted, website visitors, sales calls scheduled, outbound messages, cost per lead, JV partner meetings, referrals asked for, etc.

What things you can control and act on that will lead to the results you want.

This is great for your marketing team to identify these and drive those.

Questions to Ask Yourself

What are those key 1-2 marketing metrics you can track that will lead to leads/sales for your sales team?
What’s the highest leverage marketing channel that you need to track metrics for weekly?
Are your marketing metrics displayed and communicated regularly with the proper people?

Potential KPIs and Numbers To Track:

New Email Optins (#)
Cost Per Lead ($)
Outbound Messages (#)

8. Sales Numbers

Clearly, your business only exists if there are sales so we need to identify the top few metrics for this department and track them ruthlessly.

It’s easy to get caught up in the blur of things and take your eye off the ball of the key sales metrics, but you can’t let that happen as a small business can quickly hit a sales slump.

One of our favorite departments to optimize quickly is sales, so start tracking your numbers and we can help you turn your sales into a repeatable machine.

Questions to Ask Yourself

If you could track one metric related to your sales, what would it be?
What are 3 ways you can increase your sales conversions by at least 10%?

Potential KPIs and Numbers To Track:

Sales Conversion (%)
Avg. Time to Close (Days)
Avg. Order Value ($)
Number of sales opportunities

9. Labor Efficiency Numbers Inform You To Make Better Decisions

I mentioned that employees are one of the key forms of Leverage. But most business owners
aren’t working to optimize them.

As you look to scale, making your team and operations much more efficient is one of the best things you can do. This is key as you look to scale to however big you want. Done right, this will change your life and business.

So, a key metric that we track is called Labor Efficiency that I learned from Greg Crabtree.

What you want to see over time is that you’re getting more and more value (Profits) per employee dollar spent. This is the sign of improving operations and team.

Track and optimize this over time, and you’re going to be a happy business owner as labor productivity and operational efficiency is such a crucial driver of success.

Labor Efficiency is calculated as margins divided by employee overhead costs. You can get fancy and track per department or by revenue and by profits, but simply start by tracking your overall business revenue divided by total employee labor costs, and also the same number but with profit instead of revenue.

Then track those each month over the past six months and moving forward, and you’ll start to see some trends.

In your business, your revenue and profits may swing substantially, if so, then look at the past 90 day totals instead to reduce the variability.

Questions to Ask Yourself

What key measures do you need to look at to measure an employee’s effectiveness?
Do you track your employee overhead as a % of revenue and profits?
Are you working to make your company/team/operations more efficient?

Potential KPIs and Numbers To Track:

Track some form (or multiple) of Labor Efficiency Ratio (LER)

10. Fulfillment Is Key

We can’t forget about fulfillment! This is where most businesses either succeed or fail (not marketing), and as mentioned earlier it’s where growth begins.

Most think growth begins with marketing, but at 2X, we’ve proven over and over again this isn’t the case for 6 and 7-figure businesses. (See the 2X Growth Methodology)

So it’s essential to evaluate what key numbers that can help you measure the success of your delivery or fulfillment of your offering and optimize this to make raving fans and CFLs (customers for life!).

Happy, successful clients and customers pay you more, become your best success stories, give you testimonials, drive word of mouth and referrals, stay with you longer, are easier to work with, etc… So long story short, it’s important!

Track the key metrics that matter, optimize fulfillment, make sure you’re removed from working “in the weeds” of your business, and you’ll start scaling easier and faster than ever.

Questions to Ask Yourself

What key metrics for your fulfillment/delivery will tell you how well this area of your business is doing?
Within fulfillment/delivery, what is the big bottleneck that is holding you back from scaling, and what do you need to do to address this?

Potential KPIs and Numbers To Track:

Time to Deliver Projects (Days)
% Renewal or Repurchase (%)
Profitability Per Product (%)
% of Expenses In Fulfillment (%)
LTV ($)

To show you a specific example, the top 10 metrics we track at 2X are:

Revenue Growth (total rolling 90-day revenue chart)
Average Customer Lifetime Value (LTV)
Churn Rate (how many clients cancel; you could also do client success rate or customer satisfaction, such as Net Promoter Score, but we like churn as a top metric to know)
Cost to Acquire Customer (CAC, broken down by channel and overall)
Monthly Free Cash Flow (you could track profit margin)
Number of Sales Opportunities (booked sales calls, only counting those who are qualified)
Close Ratio (of total qualified sales opportunities)
Core Capital (making sure we are ahead financially; more on this soon)
Employee NPS
And a leading metric for our top marketing focus at the moment

If I know these, I’ll know at least 90% of the story of what’s going on in the business. From there, we can then understand where our time and energy need to go.

In summary…

If you don’t know the top numbers that drive your business yet, block off some time this week to figure them out.

You may not be a “numbers person” but if you drive your business without knowing these, it’s the equivalent of driving your car blindfolded. You will not get where you want to go, and you will crash a lot on the way there!

Now, one other thing to note. The first time you dive into the numbers, they may be more depressing than you thought. But having this view will give you the power of clarity that can then lead you to make much better decisions moving forward.

One of our clients has had a ‘successful’ multi-million dollar business as a well-known market leader in his niche, working with celebrities. The bad thing is, prior to 2X, he didn’t know his numbers at all.

When we dove in, we realized that most of his business was not profitable! He wasn’t pricing himself the right way, so a lot of his high-end projects were not only stressing him out, they were literally losing him money. This put him on this seemingly never-ending financial hamster wheel. Without knowing the numbers and his finances, he was positioned to be stuck working and chasing money forever!

But then getting clear on the metrics wasn’t easy at first. He said, “I didn’t sleep well for a month, but now I know my damn numbers!” Now he has a great plan of action on what to do (and what to stop doing), and has been profitable and growing, even during what is typically his ‘dead’ season!

I cannot reiterate enough how important knowing and acting on your top metrics are.

You can either guess and hustle or make easier, better, faster decisions using the numbers as your guide.

You’ll join the elite business owners when you do, and we’re here to help you with it when you’re ready.

Take Control Of Your Numbers To Grow Predictably and Profitably

We all need a helping hand in this lonely world of business. Gee, even Zuckerberg leaned on Steve Jobs for guidance.

And if you’re like most business owners, you’re either stuck and don’t know what to do next… or you’re just working on the wrong things.

Either way, we can show you how to claim back ownership of your business, by working on the things that will actually move the needle for you.

So if you’re looking for guidance to get on track and achieve everything you want from your business, we’ve got your back.

We’ve coached and mentored 100s of business owners just like you. So there isn’t a problem our team of world-class coaches can’t help you overcome with personal one-on-one guidance and the support of our proven growth methodology.