I had my tires aligned earlier this week. Included with my receipt was a page of measurements, detailing how each wheel was adjusted by just fractions of an inch. The result should be thousands more miles of wear on my tires, or a six month delay on the expenditure for new tires.
How is your business alignment? For that matter, do you have any tread left on your tires? Business metrics, like those supplied by my tire guy, provide a view into the functionality of the business. They also give hints as to future needs, expenses, or issues to be resolved. Metrics can confirm suspicions and help you determine what’s been successful, leading to more customers, more revenue and more profit.
We know we can only improve what we measure, but where do we start? From qualitative to quantitative measures, as a business owner you probably have a good idea which metrics would shed light on your business. Whether it’s performance, productivity, or growth; changing ideas, concepts or opinions these units of measurement allow for comparison and provide hints as to the future of the enterprise.
The best advice is to start your measurement efforts by looking in-house. Thanks to basic accounting software, you may already have comparative data for financial metrics (Have you reviewed? What do those mean?) How about sales numbers from one location to the next? Staff productivity numbers? As the business grows the metrics will measure your improvement (or decline).
The next step is to review your business against industry benchmarks. How does your business, and your team stack up against industry leaders?
Like any change, starting a comparative metrics system can lead to push back. Look for other opportunities – or perhaps a new year – to add on a measurement system. You need to know the effects of changes made in your business including changes in processes, entering new markets, hiring new people, installing new operating systems, buying new equipment etc.
Finally, as a leader, a business owner and chief-of-staff of your own operation, how do you measure your own performance? Who holds the measuring stick to you? (Hint: Take a look at The Compound Effect.) The best leaders are willing to hold the mirror to themselves first.
Join me later this week at the Revenue North Small Business Growth Summit for a complete discussion on business metrics. And send us your stories on practical metrics that have impacted your business!