Determine Your Unique Business Opportunity Number.
Sound like a dating introduction? Not on this web blog! How about a number to increase your revenues every year? Yes—we like that better. There are many factors that can cause your revenue to increase, 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 $50.00, then your opportunity number is $500.
Going after a business opportunity that is too small could actually cause your company to earn less. Since our biggest 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 $500.00.
Define your own opportunity number
The first action item is to set your opportunity number. 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 is $1,000. You always want to be striving to increase your average annual revenue per client year after year.
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 that 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 work as well as the immediate work.
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
I encourage you to take your opportunity number a step further and proactively seek power clients and arrangements that will net far more than your opportunity number. Each year your opportunity number should increase as your expertise becomes more desirable by larger clients. Your opportunities for more profitable ventures should increase annually. Let us know if we can help you calculate opportunity number.