Category Archives: Peer Groups

How’s Your Crystal Ball?

How’s Your Crystal Ball

by Ray Silverstein

When you own a business, you need to be able to tell the future. To know where revenues are headed and what resources you’ll need. The good news is, you don’t need to be clairvoyant to see what lies ahead. 

Because you have something better than a crystal ball: your business indicators. Some indicators are nearly universal (i.e., the economy), and some are unique to every business. Either way, when you track your indicators, including those listed below, you can get a handle on the future.

Indicator #1: Present and Future Sales 

Reviewing current orders is the first step to projecting revenues. But you can estimate even more accurately if you factor in outstanding bids/proposals.

For example, review past proposals for the last 12 months. What percentage did you close?  

Apply that percentage to today’s proposals, and you’ll get a sense of where you’ll be in X number of days, depending on the length of your sales cycle. In essence, you’re diagramming your sales funnel. (Then you can also work backwards to determine how many proposals you must generate to hit your sales goals.)

Indicator #2: Service/Maintenance

If your sales have a ‘tail’—i.e., the initial sale will result in service activity down the road—that’s another indicator.

Say you sell and service equipment. By analyzing past maintenance activity, you can predict what service/parts will be needed when. Apply that information to your equipment in the field, and you cannot only proactively line up parts and staff, but anticipate maintenance-related revenues.

Indicator #3: The Domino Effect 

Certain activities in one industry  impact related industries. If you can pinpoint those relationships, you can use them to make projections.

For example, one of my PRO peer group members is in the furniture business. By talking to her customers, she found they shared one common denominator: many had purchased homes within the prior 6-12 months. By tracking the local housing market, she can project which way sales are trending.

Indicator #4: Fill-in-the-Blank!

There may also be some indicators unique to your business. Keep a look out for them.

For example, years ago when I owned a manufacturing company, I used to sell to a well-known mail order house. This was before the Internet. Every day when the mail arrived, the mail order staff would immediately weigh it. Yes, weigh it. The company’s savvy owner knew the value of his average order and had calculated the number of orders that made up a lb. of mail. So hours before the orders were processed, he knew what the day’s sales would be.

Indicator #5: The Local Landscape

Your business is part of a local community. Depending on what you sell or do, all kinds of local activity may affect you: big construction projects, hiring moves by major employers, even the school calendar. By staying abreast of your community and keeping tabs on local business news, you can get a sense of what will impact your business.

So, put away your tea leaves and cancel your appointment with Madame Marie. Learn to track and read your key business indicators, and you’ll be able to predict what the future holds.

Ray Silverstein is president of PRO, President’s Resource Organization, a network of entrepreneurial peer advisory groups in Phoenix and Chicago. He is author of “The Best Secrets of Great Small Businesses,” and “The Small Business Survival Guide.” He has partnered with the Phoenix Business Journal to bring you access to the Journal’s Digital Portal, a goldmine of potential business indicators. For more information, contact Ray at 1-800-818-0150 or

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Work Smarter, Not Harder with the 80/20 Rule

Are your days so busy that you rarely get to the most important items on your to-do list? According to small business peer board members, success came easier once they learned to concentrate on tasks that matter, instead of spending time on trivial activities. They learned to harness ‘the 80/20 rule’ and if you follow their tips, you can, too.

It’s tempting to spend time on small tasks at the expense of the big ones. They’re easier to finish, for one thing, and it feels good to cross things off your list. But “doing” isn’t the same as “accomplishing.” The key is to prioritize your activities, so you’re investing your time and energies where it matters most. That’s where the 80/20 rule comes in.

“I found that with the 80-20 rule we concentrated our sales efforts on current accounts and potential accounts that would generate the bulk of our revenues.” says Pat Conway, President of Mr. Dee’s, Inc. of Libertyville, IL, Creator and Producer of Frozen Classic Potato Favorites that have delighted families across the county for decades.

Understanding the 80/20 Rule

You’re undoubtedly familiar with the 80/20 principle in one context or another.

The concept was first proposed by Vilfredo Pareto, a 19th Century Italian economist, as far as I know. After studying Italy’s economy, Pareto concluded that 80 percent of Italy’s income was generated by 20 percent of its population.

‘Pareto’s Theory of Mal-distribution,’ as it was first known, suggests that 80 percent of output comes from 20 percent of input. Turn it around, and it means that a small percentage of our efforts generate a large percentage of our results—a fact just about every PRO member has found to be true.

Apply the 80/20 Rule to Your Workday

Now, apply the 80/20 concept to the way you manage your time. Of all the activities you engage in on a typical day, what tasks create revenue for you? What is essentially trivial? Identify which activities propel you forward and which ones hold you back.

That “busy work” is destructive. Once you’ve identified it, you’re job is to figure out how to get it off your desk. Can you delegate it? Automate it? Outsource it? Forget it?

However, some of my PRO members find that there’s some ‘small stuff’ you can’t delegate. They’ve found that setting aside a fixed block of time to attend it, say, one afternoon a week, is a good way to keep it in its place. The goal is to keep your main focus—and big blocks of prime work time—to doing things that count.

Sometimes, we busy ourselves with small activities because we’re not sure how to tackle the big ones. In that case, create an action plan. Break a massive project down into small, concrete steps that you can tackle one by one. If you like crossing things off you list, this will work well for you.

Review Other Aspects of Business through the 80/20 Lens

It’s helpful to review other aspects of business this way, too.

For example, look at your customer base. What ‘20 percent’ of customers generate ’80 percent’ of sales? The actual number may vary, but the principle won’t. According to PRO members, the key is to analyze the characteristics that your best customers have in common, so you can target more prospects like them.

Or, consider what additional products or services you could be offering to these key accounts. How can you maximize the sales relationships that matter?

Or, study your workforce through the 80/20 prism. Are some employees doing the lion’s share of the work while others coast? Use this knowledge to manage your employees more effectively and ramp up productivity.

Put It in Writing: PRO’s 80/20 Worksheet

Your time and energy is finite. Applying the 80/20 Rule to your workday can help you use both more effectively. Be principled about it—put it in writing.

Would you like to attend a free PRO peer board meeting?