Looking Past the Top Line Data
Matthew MacQuarrie — December 15, 2016 Follow @MattMacQuarrie— December 15, 2016
There are a lot of different factors to consider as you evaluate the state of a business. Here’s a case in point: This holiday season, my premium steak company, Fuego Diablo, has seen revenue increases of around 20 percent over the last holiday season. That’s obviously something that I’m happy about, but it’s not the thing I’m happiest about.
What I’m happiest about is another statistic, buried below that topline revenue figure: Not only have my revenues increased, but, in the same time period, my marketing spend has decreased by a full 65 percent. In other words, I’m making better revenues, but I’m only spending about a third of what I was spending last year in my pursuit of those revenues.
That’s what’s most exciting to me about Fuego Diablo right now—not just the revenues, but the ROI. And it’s proof of an important point that I think a lot of new entrepreneurs overlook, which is simply this: You can’t just look at the top line numbers to get a sense of how the business is doing.
After all, my sales could be down a little bit and it would still be a great year, solely because of that amazing ROI. Conversely, my sales could be up, but if I was also spending a great deal more on marketing, it wouldn’t be as welcome a development.
What the improved revenues ultimately tell me is that Fuego Diablo has had a good year—but what the marketing ROI indicates is that it’s positioned for a bright future. On-site conversions have doubled over last year, and there are a lot of new individuals who are becoming aware of the business and its potential. That means there is every opportunity for me to seize this momentum and improve my revenues even further in the years to come.
And those are the kinds of factors entrepreneurs must consider: Not just the big, flashy numbers, but the subtler signs that lurk just below the surface.
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