Math Over Magic: The Four Metrics That Grow A Staging Business

We break down the four metrics that actually move a home staging business: top-line revenue, profitability, job volume, and average ticket. We show how seasonality, activity, and smarter scoping turn uncertainty into a plan you can run.

• why top-line revenue funds people, systems, inventory
• how to forecast seasonality and plan cash
• the four profit buckets: moving, payroll, direct costs, inventory
• cutting silent expenses to lift NOI
• job volume as a proxy for market activity
• using historic data and peer signals to spot shifts
• raising average ticket by serving core spaces better
• setting a proud minimum scope that protects the brand
• converting first impressions into measurable ROI

If this was valuable to you, subscribe to our show! 

Transcript

It’s Not Magic, It’s Math

SPEAKER_01 0:01

All right, ready?

SPEAKER_00 0:02

Yes.

SPEAKER_01 0:02

Okay, so I thought we would kick off today's episode with your favorite phrase, which is it's not magic, it's math. That's correct. Um, you ask anybody on our team, and they've heard that phrase a thousand times over. But what it really comes down to, quite simply, is there's not some magical solution or we have the pixie dust that makes something successful. You look at the math and the metrics, and they tell you the health and the wellness of your business. So we're gonna talk today really about like four key metrics that we track religiously to help us kind of pulse check what we're doing well, where we may maybe need to make some adjustments and shifts, and then why each of those metrics matter. Should we dive in?

SPEAKER_00 0:40

Let's go.

SPEAKER_01 0:40

Cool.

SPEAKER_00 0:41

Let's do it.

SPEAKER_01 0:52

Okay, so today we're gonna dive into a conversation, but I thought we'd kick it off um by introducing everyone to your favorite phrase, and that is it's not magic, it's math.

SPEAKER_00 1:01

I'm such a nerd.

SPEAKER_01 1:02

Break it down. What does that mean?

SPEAKER_00 1:04

Break it down. I it really the breakdown of that is just about everything in life can be broken down in a lot of ways to a metric, really when you're running a business, I guess. Um it's the level of activity, it's you know, the the pricing, it's the dollars, it's the process, you know, um, it's time, all of those things, right? So on and so forth. Um, but there's a lot of math that really needs to be considered in really everything that you're doing, right?

Why Top-Line Revenue Matters

SPEAKER_01 1:32

Yeah, I think when it comes to business, sometimes people think like the sales that you're generating or the business that's growing, it's like, oh, they have some secret pixie dust that they like sprinkle on their business, and that's why they're successful. But really, every decision or um identifier of success oftentimes comes down to activity and metrics. And so when you change that from like, oh, they just have some magical ability to be really charismatic with your customer, whatever it may be, to like they are just doing quite simply more activity and more volume, all of a sudden it makes sense. And it it gives you as a business owner like power because you understand that you actually have ownership over where the future of your business goes. It's not just in the hands of somebody that maybe is better at selling or somebody that's maybe better at operating. It really just comes down to math. And so in our business, we look at a lot of different metrics to kind of um evaluate the health of what we're doing on a monthly basis, sometimes even daily basis. But let's talk about four key metrics that every home staging company should really be paying attention to and why those matter. So, top one is first and foremost, um, total revenue. Revenue is the sales and the money that's coming in directly from your customers before you spend any money on your employees and your inventory and those details, but how much money is actually coming into the business? So let's talk about why that matters.

SPEAKER_00 2:53

Well, it matters largely just because it's going to give you the ability, the resources, if you will, to invest in systems, processes, personnel, um, the inventory that's needed in our space. Um I think it's a very interesting statistic that, you know, the average, according to Risa, right? The average gross revenue of a home staging company in our industry is about a quarter million dollars. Respectable, right? Um, but there's also statistic out there that says what, less than 10% of all small businesses do a million dollars, period. So there's there's definitely a gap there, right? And in our industry, it's it's a creative one, it's a creative space. Um, but if we ignore the numbers, if we ignore the activity, um, then we'll just be mediocre at best. And we don't want to be that, right? So top line revenue is key, constantly growing that metric and moving it forward um is really, really important.

SPEAKER_01 3:48

I think the other thing that's important about tracking that metric specifically is it allows you to make decisions and know how much money is coming in so you can know how much money you can spend. Um and we're gonna dive into that in a minute, but like, can I invest in additional personnel? How much more money do I need to make at the top line to be able to make these additional hires? One thing I would say that's really important to think about if you have a staging business is your top line revenue is going to look different every single month. We are in a seasonal business, um, and I feel like I say that all the time, but like I want to shout it to the mountains because it's all too often that I have conversations with stagers and they're like, I crushed it this year, and they're in like October. And we all know that we're tied to the real estate market. So like things are exciting and revenue is high in February to September, October, but it falls off of a cliff in November and December and January. And so knowing that your top line revenue is gonna drop real fast in Q4, and you need to have the cash available for that is important when you're managing and you're making projections. Just because things are really fantastic in June doesn't mean you're gonna hit that same sales number in December.

Seasonality And Forecasting Reality

SPEAKER_00 4:54

Yeah, I think you also used a really important word there in what you just said, and that's projections. Um, the ability to forecast out and have a plan, right? Uh people don't plan to fail, they fail to plan. And and that really, if you're sitting down at the beginning of the year and you're projecting out where you want to be at the end, it really helps you take bite-sized pieces to get there and really plan for that event that you just talked about. If you've ever seen Game of Thrones, you understand the phrase winter is coming. Like that's that's a thing, right? So you've really got to be able to understand that a lot of your business in in our world, right, is done in the second and third quarters. I would rank the first quarter as the third best performing quarter, right? Before the fourth quarter. So really planning that appropriately and then breaking it down into month by month, I think is gonna help you get to the right level of top line revenue that you really want to do all the things that you just mentioned.

SPEAKER_01 5:44

Love design, but think like a business owner. If you're ready to leave your nine to five and want to do something that's buildable and scalable, check out linden-creek.com slash franchise and see if Linden Creek is the right fit for you. Yeah, so the second metric we track is profitability. Um, this matters because it doesn't matter if you make eight billion dollars every single year, if none of it comes home to you, it's a lot of work for nothing. And so your profitability really is the money that you are bringing home at the end of every month or at the end of every year that you either get to keep in your pocket and use for your family and your goals, or some of it that you may be choosing to put back into the business to reinvest into the growth and where it's going. Um, there are four expenses we really like to look at when we think about profitability that we kind of factor in. Do you want to go through those pillars?

Profitability And The Four Buckets

SPEAKER_00 6:32

Yeah, absolutely. And real quickly before I get into that, like to your point as well, you know, if you bring in a million bucks, but you spend$1.2 million, you lost money. Yeah. Right? A lot of people don't think of it that way. And so really breaking down where your expenses are is gonna help you with profitability. One of the most underrated ways to increase your profitability is to cut your expenses, right? Um, so the the four buckets that we really allocate resources to um here at Lincoln is the moving bucket, the personnel bucket, right? Your payroll. That's that's your next biggest expense. Um, and then your direct cost is your third bucket, right? You know, so the cost of the warehouse, your utilities, everything that it takes to sort of keep the lights on, if you will. And then that fourth bucket is inventory, really, which again in our business isn't as an expense as much as it is an asset, right? But still having the resources to invest back into inventory because that helps secure the brand and keeps the brand consistent. So those are the four buckets moving, payroll, uh, direct costs, and inventory.

SPEAKER_01 7:36

Yeah. And then everything else after that is the pretty gravy that you get to bring home.

SPEAKER_00 7:40

Yeah, we call it NOI, right? Um, so that's that's really what it's about. Um really, if you're looking to sell your business one day, like that is the metric that really matters, right? It's not top line, it's the profitability that's there, you know. So um again, if if we're diligent in those four buckets, then that should leave plenty there left over to determine the value of the business.

SPEAKER_01 8:02

Okay, so we talked about profitability, we talked about top line sales. Um, the next metric we like to look at is the number of staging jobs that we're completing.

SPEAKER_00 8:10

Absolutely. Yeah, we talked about it in the very beginning, right? But like the true measure of your success is the level of your activity, you know. So if if we're falling short in a specific area, the answer is to go do more, right? If we're not getting enough sales coming through, then are we reaching out to enough of our clients, our real estate agents, our builder contacts, right? Do we need to let more people know that we're here? Um, that we have a service that we can provide for them to provide value for their organization. Like that's the key to um so just being relentless with activity. I know there's things we do at Linen Creek um, you know, that are just all about personal relationships, um, because that's really what this is all about. But your activity level has to be high.

Activity Levels And Job Volume

SPEAKER_01 8:53

And I think on that point, one of the things that um stagers have as an advantage if you've been in business for at least 12 months, is you get to look back at historical data. And that's something that's really powerful. So you can look and see, hey, last year in January, what did we do? That gives you some baseline for what you're probably gonna do next January as you're thinking about this strategy, as you're thinking about inventory demands. But the other piece of it is if there's something that's off one year or one season where you're like, last year we crushed it, this year we're struggling. That's my favorite time to like pick up the phone, call others in the industry that I've become friends with and go, what are you seeing in your market? Or maybe we're in the same market, but like, are you seeing a shift and change in conversations, in what's happening? Because that's a really I use that metric more than anything as an indicator to say, here's what your market and your industry is doing, specifically regionally. And of course you can look at it nationally too. But that is the biggest trigger for me that like I pay attention because then it tells me what's going to be happening in the next three months, six months of our business so that we can plan and prepare accordingly.

Using History And Market Signals

SPEAKER_00 9:53

Yeah. That's really good. Also, like, you know, a lot of people, particularly if they're getting started with with their business in particular, but and they're trying to get their name out there, or in our case, uh, you know, a Linden Creek franchise as an example, and they're building their brand and their new market, you know, be prepared to hear the word no. I think that's part of it. Um, you know, we often say within our organization, right, we bring the the baseball hall of fame reference, right? Uh you if you strike out 70% of the time, you're in the hall of fame. Yep. You know, and so like that that's really what it's about. It's that level of activity, right? Getting your at bats. And so if somebody tells you no, that's all right. Somebody's gonna tell you yes, you know, and so really the the metric is also the same in in the selling world in general. If you have a product and you're trying to close a deal, typically a very good closer is gonna do anywhere from 25 to 35%, right? That's very good. So it's easy to say that the average is between 20 to 25. So that means that if you want to get a couple of staging projects, you have to reach out to 10 viable contacts and send out 10 decent quotes, right? So, really, again, this goes back to level of activity. If you want to increase your sales, increase your activity.

Raising Average Ticket The Right Way

SPEAKER_01 11:05

And then the last metric we track um is average take a price. This is a fun one for me because it's newer to my business. It's actually something that honestly came from you and you questioning what I was doing in the most beautiful of ways. So when you join the organization, you know, I was like, hey, here's how you go give a quote, here's how you meet with a client, here's how you do these things. And you were like, well, why don't we just tell them to do another room in another space? And I was like, well, they they don't always ask for another room or space. Like I was nervous to continue kind of have that conversation of like, you also are going to be served best if we include your office or we include your back porch or whatever it might be. And you just reframed my thinking on that. And what was interesting is when you would upsell and and not so much upsell because then it makes us more money, but like truly upsell because it served the client in the best possible way. And we got to watch that, it changed the math behind the scenes in our business. Because what maybe was, let's just say for easy numbers, a$5,000 project where we go out the door and we have to have a stager go out and measure the room, measure the rooms and photograph it. We have to have the stager design it. We have to have the movers drive all the way out to the property to do the install to do these things. My costs are about X dollars, right? But that cost doesn't really change whether it's a$3,000 staging job or a$7,000 staging job. They are pretty similar. And so what happens is when your ticket price gets higher, your margins on your job get higher and it's more and more worthwhile for your time to be spent on these projects. And so we really started tracking this as a metric for us because it allowed us to say, yes, we're doing the right jobs where they give us enough margin and breathing room to make sense. And maybe there are some other jobs that we need to be saying no to because by the time we get the team out there, by the time we do all of our due diligence, I've paid for my entire cost and we didn't make any money when it was all said and done. Um, and so tracking and paying attention to your average ticket job is hugely important because oftentimes that's one of your biggest lifts is what if we just add one more room to the project scope instead of saying, hey, we need to land one more listing this month. That sort of metric is easier to increase and to modify where it doesn't change your costs. So you don't have to go in front of four more agents and send four more quotes. You're just upselling one more space, and all of a sudden the math on the paper changes in in your favor in a beautiful way.

Scope, Client Value, And Brand Standards

SPEAKER_00 13:23

Yeah, you're right about that. And and I think, again, it's not upselling as much as it is providing greater value for the client, right? You know, our number one objective is to serve our clients in whatever market we may be in, right? And so, and to their credit, most of our clients are agents or builders. Like this isn't their area of expertise, right? And we're here to serve them and help them along in whatever their process is. But using an agent as an example, he or she has 50 million things that are going on behind the scenes to work on this listing, right? And so they may think, you know, to their credit, to come into a house and like the biggest areas in this home are going to be the living room and the office and the dining room. You know, and and that's a great, that's great. That's a great starting point. One of the things we talk about in our organization is really when somebody opens that front door, you get seven seconds to make a first impression, right? That's just humanity, that's natural. And so if we open that door and there are some pockets of the home that are staged and some that are empty, what are we doing, right? How does that best serve the client? So again, just bring in your area of expertise as the professional to say, I'm okay with those three spaces. That's awesome. But to your point, what if we did the primary bedroom and the kitchen as well? People want to see where their king bed's gonna be, right? So let's not leave that off the scope. So again, from the business side, really know what your minimum scope is that you can be proud of, that you can stand behind, that the Linden Creek brand looks really good with. Um, but also know that it's serving your client really, really well when you make those suggestions. Ultimately, they're the client, right? If they just say, you know what, Alan, that was a great suggestion. I really don't want to do the upstairs bonus room, totally fine. But at least you you made the pitch first per se and presented that value. So always coming at it from that angle of I'm going to make your listing as powerful as possible. That doesn't mean we stage every room. We don't need to very rarely do we do that, right? You know, usually on the second floor when there's secondary bedrooms, you know, a bedroom is a bedroom, it's subjective up there, right? But on the main space, you know, looking out under the covered patio, um, all of those other areas, suggesting that to the client gets them to see the value, and of course, um, that helps increase your average ticket price. And that's just simple. That's your number of installs divided by your top line revenue. I mean, that's that's it. Or top line revenue divided by your installs. There you go. It's not magic, it's math.

SPEAKER_01 15:43

I know today's conversation was nitty-gritty and in the weeds, which we enjoy doing um on the occasion because that's uh what we live and breathe and love. We're nerds. We are nerds. Um, but I hope that this conversation was one that added value to you. Hopefully, it identified some metrics that you can maybe start tracking and paying attention to within your business that allows you to use that data to plan and prepare for your growth as you build your business. If this was valuable to you, subscribe. We want to continue more conversations like it. This is In Good Space.