What we hear entrepreneurs say many times is – it's too confusing or too hard to set a financial goal from my networking efforts. If you have ever thought this - here is an easy way to think about it and set a revenue goal based on your networking efforts.
To get started, we are making an important and doable assumption - that you will build the majority of your business from referrals. You have to decide what 'majority' means to you. Is it 60% 75%, 80%? For this exercise we are assuming that 80% of your business will come from referrals.
One of the latest pieces of research from Dr. Ivan Misner gives us the guide we need to really prove in and measure just exactly how much time we need to put into networking meet this goal. His research shows that people who are successful building their business from networking (80% plus!) spend a minimum of 7 hours per week networking!
People who are successful in BNI know this works and know how to spend that 7 hours and many spend more and earn 100% of their business through referrals. BNI gives you the structure, the sales team and the education to make it happen.
Decide what you want to make on an annual basis. Is it $150,000, $250,000? This is up to you (and can be an entire blog entry on its own).Once you decide that number, take 80% of it and then divide that amount by 12 months.
For example – your annual revenue goal is $150,000. 80% of that is $120,000 and $120k divided by 12 months is $10k per month. So your networking goal is to generate $10,000 a month in business from referrals.
The next question to ask yourself is - how many referrals I need, on average, to make that work and in what timeframe? The bigger the sale, the longer it takes for the client to 'let go' of the $$$. So for you – do you need 10 referrals a month with an average value of $1,000 each or do you need 4 with an average of $5,000 each – because you know of those 4 some will close faster than others. In other words, of the 4 you may only close 2 in one month and the remaining 2 in the next.
Only you know the right numbers to use so take some time and really think about it. It's an important and simple exercise and one many small businesses don't do.
Now as you are working through this one more thing for you to think about.
What is your close ratio? Do you close every 1 out of 3 referrals, every 3 out of 3? Your close ration is really based on two key factors – the quality of the referral (is it a true referral and not a lead) and your sales skills. Do you really know how to have the conversation with the client once you get the referral to close the deal? The answers aren't complicated to either of these questions – basically a yes or a no!
One of the BIG benefits of the Fast Track that we see over and over again with chapters doing the program is the increase in the quality of the referrals. When you have a high quality referral your chances of turning that referral into revenue are much, much stronger.
We do a lot of work with entrepreneurs to help them gain the skills so the conversation with the referral is easy and (brace yourself) – FUN.
Let us hear from you!