From Traffic Jams to Business Bottlenecks: How to Keep Your Business Flowing Smoothly
Have you ever been stuck in a traffic jam, only to find out that it was caused by traffic going from three lanes to one, causing a bottleneck in the flow?
Well, just like traffic, our businesses can experience bottlenecks that slow down progress.
Every business has four key areas essential to success, and also where bottlenecks can occur:
A – Attraction,
C – Conversion,
D – Delivery, and
C – Collection (Cash Flow).
These areas are essential for the smooth operation and sustainability of your business. But before you guess which one you might have and jump into action, let’s take a moment to assess which bottleneck(s) you might have first.
This is know as the ACDC framework and while attract comes first, it is easier to begin with conversion because it helps us assess our attraction more easily.
Before you read on, if you are a video person you can see the replay of my presentation of this content for the On Purpose Women’s Global Community.
Conversion
Conversion in its simplest form, is just the number of people who purchase your offer divided by the number of people who see your offer.
So if you sell 10 items and 40 people saw the offer you made, your conversion rate is 25%
If you have a calculator and know where the division button is, you can calculate these. It’s that simple.
So what do you do with this number and how do you know if you have a bottleneck?
To begin with you need to know the average conversion rate for your industry and the sales method you used. Sales methods include email, webinars, social media ads, 1-1 calls, etc. The goal is to be at or above average.
If you fall below the average, you have a conversion bottleneck.
If you fall at or above average, you do NOT have a conversion bottleneck.
Below are some sample average conversion rates, but be sure to research the rates for your industry.
Attraction
The attraction bottleneck focuses on the number of leads needed to reach your revenue goals and whether you have enough or not.
To calculate this, you will need your conversion rate, which is why we did that first.
First we need to figure out how many sales you need to make to reach your revenue goal. You do this by dividing your revenue goal by the price of your offer.
Example:
You want to make $10,000 next month and the product you are selling is $500. $10,000 divided by $500 is 20. So you need 20 sales
Next we use the sales needed and the previously calculated conversion rate to determine the number of leads needed. The calculation for this is the # of sales needed divided by your conversion rate.
Once you know the number of leads needed, you can determine if you have an attraction bottleneck.
Example:
If we continue with the example above, you need 20 sales. If you use 1-1 calls and your conversion rate is 30%, you will need about 67 leads.
Ask yourself if you have that many leads or more. In this example, you would ask if you have 67 leads or more.
If you DO NOT have that many leads, you have an attraction bottleneck.
If you have that many leads or more, you do NOT have an attraction bottleneck.
Delivery
Delivery looks at two key aspects: capacity and quality. Can you deliver what people have purchased and maintain a high level of quality.
Some questions to ask to determine if you have a delivery bottleneck are:
- Do I have a waiting list?
- Is there a long lag between order placement and delivery?
- Is quality suffering because I am serving too many clients?
- Would quality suffer if I had the # of sales indicated in attraction?
If you answer yes to one or more of these questions, you have a delivery bottleneck.
If you answered no to each of them, you do NOT have a delivery bottleneck.
Collection/Cash flow
Cash is the lifeblood of business. If you don’t have cash coming in, your business is going to be in big trouble.
A couple key questions to ask here are:
- Do I have enough cash to fix my bottleneck(s) from above?
- Are all invoices/payments from clients up to date?
If you answer NO to one or more of these questions, you have a collection bottleneck.
If you answered YES to each of them, you do NOT have a collection bottleneck.
Determine your top bottleneck
If you only have one bottleneck, fix that one.
If you have more than one, you will need to consider which one needs solved first. Generally collection bottlenecks need to be solved first because you will likely need $ to solve the other bottlenecks.
Next is typically delivery. There is no point in attracting or converting more clients if you can’t deliver on the business you already have.
While attraction would seem like the next choice, it is actually conversion. If you can get your conversion rates to the average for your sales method and industry, you will need fewer leads to reach your goals. It pays to get better at conversion first if you have a bottleneck here.
While it is first in the ACDC acronym, attraction is typically the last bottleneck to solve and yet I see so many entrepreneurs spending a ton of time an energy here to the exclusion of the other areas.
I fully support continuing to grow your audience and network, but if you have a bottleneck in one of the other three areas you will move forward faster if you address that bottleneck first.
Next steps
- Identify your top bottleneck
- Focus on fixing it over the next 90 days
- Repeat the process to continue to improve and grow your business
- Grab your copy of the PDF that summarizes everything here
About the author
Vicki is a Certified Clockwork Partner, Certified Business Coach, and Certified Kolbe Consultant who works with both solopreneurs and small business owners to streamline and optimize their businesses. Time is her favorite commodity and she is committed to helping her clients to have more time for the people and things in life they love the most.
If you are sick of working harder and longer than you did when you had a job for even less money, let’s chat and see how to turn that around.