What’s Your Opportunity Number?

Is your revenue increasing or decreasing every year? There are many factors that can cause your revenue to slide, and one of them I’d like to introduce is your opportunity number.

Your opportunity number is the smallest amount of business you’re willing to take on when you take on a new client. Here’s an example: if you have a ten-hour minimum per client engagement and your hourly rate is $300.00, then your opportunity number is $3,000.00.

Going after a business opportunity that is too small could actually cause your company to earn less. Since our limited resource is time, we can either spend our time going after small fish or big fish. If we want our business to grow, we need to let go of the small fish. In our example above, it’s not worth it to you to sign up a new client for less than $3,000.00.

Define your own opportunity number

The first action item is to set your opportunity number if you don’t already have one. Take a look at your average annual revenue per client for last year or the last twelve months. Continuing our example, let’s say it’s $10,000.00. You always want to be striving to increase your average annual revenue per client year after year, in most cases.

Your opportunity number and your revenue per client are related in an important way. If your opportunity number is too low, it can drag down your revenue per client average. That means it’s going in the wrong direction.

Evaluate your opportunity number

If your opportunity number is too high, you may be walking away from business that could be profitable after a period of time. It’s possible once you build trust after doing a small engagement that the client will come back for more. So it’s important to factor in the potential.

If you have a sales team, you may have a different opportunity number for each sales person and yourself. They may have more time to pursue a larger number of smaller deals. If you have lots of leads and less time, then you want to find a way to work on the largest opportunities by qualifying those leads, estimating the potential revenue, and comparing that to your opportunity number.

Once you implement your opportunity number, you might free up quite a bit of time. You’ll have more time to go after the larger opportunities while giving yourself permission to “throw the small fish back in the pond.”

Seizing the opportunity

There’s nothing wrong with taking your opportunity number a step further and proactively seeking power clients and deals that will net far more than your opportunity number. I have one client that doesn’t look at deals unless they have a $1 million potential. His opportunity number is $1 million.

Let us know if we can help you calculate yours.

Find your ideal client in 2012

If you could wave a magic wand and work with any client you wanted in 2012, who would they be and what would your business look like? It’s a fun exercise to think about right as we start a new year.

Let’s begin with your current client base. You may want to create a report of customers that you had in 2012 and list them by revenue collected. Who are your top revenue-producing clients? Are they easy to work with? Do you love the work you are doing with them? If so, you may want to find out a little bit about the type of client you enjoy working with so that you can find more of them in 2012.

Are they male or female? In a particular industry? Have a particular personality trait? Enjoy the same hobbies you do? Have kids? Are they from your alma mater? Do they live in a certain neighborhood that you enjoy?

Look to see if your top clients have characteristics in common. You are beginning to make a picture of who you best work with.

The questions are endless, and you may need to ask quite a few of them before you stumble on what your top clients might have in common. Perhaps they are all dog lovers, pilots, or football fans. Perhaps they have all been in business for less than five years. Perhaps they are all transplanted from the south. Once you see the connection, you will have some freedom and a clear direction to find more people just like them.

Also take a look at what services you like to deliver best. Once you’ve been in business for a while, you may have some work that’s not your favorite, but you keep doing it for the money. In 2012, think about how you can proactively attract clients that need the type of work you love to do. Work that challenges you, is interesting, and is profitable will keep you from burning out. Plus, it will help your entire business and your other clients to seek clients that energize you because you will be happier.

Start by creating another report that shows you revenue by service or product line. What would the ideal 2012 mix be if you could wave your magic wand again?

The intersection of your ideal client and your ideal service/product revenue mix is the sweet spot you want to aim for in 2012.

It’s simple exercise, yet a very powerful one. Take a deep breath, wave your magic wand, and think about what would really fulfill you as a business entrepreneur. Then take the first step to creating a business full of the ideal client and ideal work of your dreams.