As the last few “non-essential” businesses take their first tentative steps out of lockdown and back to some kind of normality, they return to a vastly changed economic landscape, but there is hope and using an income matrix can help to map sales.
You may be familiar with Robson Laidler’s Three Freedoms:
- Free your mind – Regain control and reduce anxiety by putting together a solid plan.
- Free your finances – Lay the foundations in which to grow. Get compliant and make your money work for you.
- Free your time – Remove the barriers stopping you from focusing on what you do best.
This most recent loosening of restrictions has presented businesses with a natural progression from seeking freedom of their minds to freedom of their finances. Assuming business owners have had the opportunity during lockdown to develop an action plan, we also assume that within this plan there will be actions to increase sales or the top line.
Robson Laidler’s coaches follow the NOW, WHERE, HOW principle when preparing business plans:
- Where are you right now?
- Where do you want to be?
- How do we get there?
The order of these questions is crucial, as good strategies can only be formulated when you know where you currently are and where you want to be. This presents a problem for businesses when it comes to sales, as with the amount of uncertainty surrounding entire industries, it makes it difficult to make a meaningful prediction of top line performance for three to five years’ time. This is exacerbated when the current sales figures are skewed by operating within a pandemic, which are normally used as the benchmark of growth.
What if there was an alternative way of mapping your current and future sales?
Welcome to an income matrix. This requires a breakdown not only by individual product or service line but also customer segments. These segments can be used in whichever way best suits your business, be it via geographic location (UK, Europe, US, Asia etc), customer size (SME, Partnership, Charities, Plc etc) or industries (manufacturing, food, construction etc).
Here is how you can use it:
- List out the core products or services that are offered down the left-hand side of a matrix.
- Next list out the average ‘Unit cost’ for each service
- List the customer segments which best suit your business. We suggest 4 to 6 segments.
- Use the matrix to plot the current sales. If you end up with most of the sales not accounted for you need to add more product/services categories.
- Ask probing questions to gain an understanding of where the current issues are in this income make up (such as low profit customers and segments that are difficult to make a profit in).
- Ask yourself/ any participants, what income / revenue they would like to achieve in the next 12 months. You will need to resolve any differences in the group at this point.
- Working backwards now map out a second income matrix for the ‘future’ (WHERE) mix of products / services.
- Once the everyone is comfortable with the plan review the differences between the Now and the Where results.
- Now develop a One Page Plan’ and determine the 3 key strategies that will have the biggest short-term impact on achieving the Where plan. You can use Mindshop tools such as a Force Field to develop the action plans.
This helps provide not only, a clear and analytical picture of the business both now and for the future. It also enforces a process, which pushes you to start developing specific strategies and action points to help close the gap between the two.
Download your income matrix template here:
If you need help in creating your own income matrix or facilitating a one page planning session, reach to our Business Accelerator team.