If you were sitting on a beach armed only with a Smartphone or laptop and you could only spend one minute reading an email that contains the key performance indicators about your business, what would those indicators be?
That is a difficult question for most business owners and entrepreneurs to answer off the top of our heads. Just as a doctor will check your vital signs – i.e blood pressure, heart rate – what are the vital few metrics that indicate to you the health of your business at any given time?
Regardless of whether I work with entrepreneurs or in a corporate environment, identifying those critical few metrics is a important conversation.
Entrepreneurs are notoriously negligent when it comes to measuring anything beyond top line, bottom line, their checking account balance and a few expense items. They spend their waking hours running their business; usually wearing multiple hats and forgoing sleep.
In the corporate world, typically you will have access to more data than you know what to do with. Therefore defining the vital few becomes difficult.
How do you create your personal Sitting-on-the-Beach Dashboard? Let me help you with a short story.
When I served as the President of a Business Network International Chapter, my leadership team and I met with other area chapters to review our goals for the coming year. Most chapters articulated goals around the number of referrals to be passed, a desired amount of closed business to be attained and their membership numbers.
My team realized that we had very little control over those metrics so we took a different route. We set goals for attendance, one-on-one meetings between our members and the number of visitors to the chapter. Our theory was that with increased attendance, better relationships between members and more visitors, we could impact the number of referrals, closed business and membership.
Did you catch the lessons in this story?
Lesson #1 – It is important to look below the surface of each vital metric. Your goal should be to increase your visibility into the inputs or root cause of each key metric. For example, everyone measures revenue but what are the inputs? Price x Sales Volume. How do you sell more?
- You could sell more to your current customers. What percent of your current sales comes from them?
- You could make more sales calls. Who do you call on?
- You could increase your marketing budget or try different marketing techniques. How do you know which marketing works?
Lesson #2 – Pay particular attention to metrics that you have some control over. As in the above example, you have very little control over price. You also have no control over the economy, the weather or consumer preferences. If you focus your measurements on those things that you do control, your odds of improving your business over time increase dramatically.
I challenge you to evaluate what you currently measure in your business. Determine what you should be measuring by looking at the root cause or inputs to each metric and begin measuring those things.
Send me your feedback and success stories as you implement this strategy.