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Key measurements you need to track to grow your business

Author: Louis White

Starting a business from scratch is hard enough, but when you are 18 years old and jump on a plane to China, the first time you have been out of Australia and with no comprehension of Chinese to negotiate with manufacturing plants there, you are at the very least a determined and bold young person.

But that is what Brad Smith did and 10 years later his dream of starting his own motorcycle company, Braaap Motorcycles, is real. And the company is finally starting to grow after many years of setbacks and frustrations, which he details in his autobiography, Do it real big.

“After I had been ripped off the year before, where I had ordered specific motorbike parts from a factory in China to build my own motorcycle, only to receive nothing according to the specifications and discussions I had with the manufacturing plant, I knew the only way to get it right was to go there in person,” Smith says on his initial journey to China 10 years ago.

“I arrived in China with no interpreter and no plan, other than to go and visit as many manufacturing plants as I could fit in for two weeks. I remember getting off the bus in the town centre with my luggage thinking, what the hell do I do now? Where do I start? My phone doesn’t work here and no one understands me. I don’t even know how to book accommodation for the night.”

A Chinese man soon approached him to act as his interpreter and on the second-last day of his trip he found a factory he could work with, although there would be many trials and tribulations to finally establish his motorcycle company in Australia and start selling enough bikes to become profitable.

“No one is exempt from a challenge. Problems are a sign of life,” he says. “Problems are also a sign of growth.”

Smith’s love of motorcycles stems from his childhood, where with his father he was riding custom mini-bikes for years, and he was keen to start making motorbikes that were affordable, so more people could experience the thrill of it.

“I just loved motorcycles from as long as I can remember,” he says.

Obtaining finance was a problem for Smith, being so young and with no work experience, so he worked with a private equity group to start his own finance company and build the company. Helping finance his business was the income he earned, and still earns, speaking to large Australian corporations like Westpac, Telstra, Optus, Suncorp and others on his experiences in starting his own company.

“The main reason that they ask me to talk is to share my experience about growing a company,” Smith says. “Growth is the essence of life. It is all about making progress and how to become the best person we can be.”

Smith believes that there are three measurements every business should know.

“First, they should know their sales targets,” he says. “Secondly, they should know their conversion rate and thirdly they should know how many leads they need to generate, based on that conversion rate, to hit those sales targets.

“If you don’t know those numbers for your business, then your growth strategy is hope, and hope is not a growth strategy.”

Smith is aiming to sell 10,000 Braaap bikes a year and says the company is already profitable, after reaching 1000 sales a year.

“We are making progress,” he says. “We are the only motorcycle company that offers a lifetime guarantee and we are the only production bike to win back-to-back world championships for our genre of sport.”

But growing your business to the next level is a common challenge for most small businesses and it is not uncommon for that challenge not to be met.

Expanding into new markets, hiring more staff, changing the management structure and undertaking a new strategy are all challenges that can leave many businesses struggling to cope with their new reality.

“It depends on your business model when it comes to calculating growth,” Fi Bendall, chief executive officer of Bendalls, says. “If you are selling hard products or seasonal services I think it is easier to calculate, as opposed to selling consulting services.

“I think most small businesses do not apply any formula,” Bendall says. “I think the famine to feast approach often applies, which is why cashflow management is so important and planning is important.

“I wish I had a mathematical formula, but I must say I don’t, even after over 20 years working for myself. I do, however, have plans and a strong sense of always balancing new business development with existing business.”

Bendalls specialises in digital and marketing strategy and Bendall says there are a few basic strategies to ensure a small business keeps growing.

“Balancing new business development and current business is essential,” she says. “It’s easy to get distracted when times are good and forget your pipeline of other business. The other aspect to small business ownership is to really put the customer first. However, that should not mean the doors are always open, which is tempting. We all need downtime and often it’s when your biggest inspirations come to you. 

“You should also never be too proud to ask for help and turn to people to mentor you. People are more than willing to help and provide advice, more so than you expect. Feedback and peer-to-peer support gives you so much input to grow your business.

“Where possible, always innovate, listen and learn. As a SME, you have the ability to be far more nimble and flexible to take on the big boys.”

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Posted on March 4, 2015

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