Posts tagged with: KPI
Your Magic “Operational Dashboard”
Your magic “operational dashboard” is simply a listing of your business’ key metrics (your key performance metrics (KPI)). They are effective for many reasons.
GoDaddy CEO, Bob Parsons, summed it up when he said,
“Measure everything of significance. Anything that is measured and watched, improves.”
It’s simpler than you think. List your company’s key metrics; the numbers, activity, results that are important to you. These become your personal ‘magic’ dashboard.
Simply by measuring something, it can improve. Intuitively, this makes sense. Start with your own operational dashboard to track performance and exactly how your business is performing overall.
Tracking and measuring will:
- improve productivity
- demonstrate value
- provide the data to spot and fix problems faster
ACTION: Prove it to yourself. Pick 3 things significant to your bottomline. Measure, watch and track them for 30 days. See what improves.
To make your business more profitable, you must be consistent about tracking and measuring. Start by determining what your key performance indicators are and then decide how you want to measure and track them.
3. Identify What Your Key Performance Indicators (KPI) Are:
You must identify and track your KPI religiously. You must be a fanatic about following these numbers. These are the numbers you receive and track in:
- Your daily reports
- Your dashboard
You already have many tools that deliver some of your KPI:
- Constant Contact
- Google Analytics
- Your bank accounts
What else do you need?
Are there other KPI that you need from your call center, from distribution, from your merchant account? To be of value towards your exit, they must be written down, recorded in a way/form/place that create a uniform history accessible to key executives – not verbal reports, or text messages, or instant messages.
4. Decide How to Measure
Use whatever form or style, template or spreadsheet that works for you. Discuss and train your team on what you are tracking, what measures of change you are looking for and how these measures impact options and decisions every day. Only when you put enough value on these KPI, will your team pay attention and both deliver the data and pro-actively strive to hit better numbers.
Tracking and measuring does not have to cost anything. Use what you have already. Tracking and measuring can be:
- Manual (inhouse & outsourced)
- Online (e.g., Google Docs)
- Automated (in your Contact Management software, in your operations and logistics software, in your current marketing reports)
Check what you have running. Add to your daily reports and your dashboard only those new KPI that you absolutely need to accelerate growth, maximize value, and make your business buyer ready.
- Keeping your own checkbook vs having your bookkeeper balance the books
- Set up software tools that work in the background tracking everything for you.
- Implement tools or software that automate tasks and reports
You wear many hats in your business. How do you take the pulse of your business? What data do you need to make the best decisions fast? What data do you need to make your business invaluable to your clients and by extension to your prospective buyer?
Tracking And Measuring Will Make You/Your Business More Profitable
We’ll stay on this topic for a few days. Here are the first two points:
1. Identify what numbers to follow.
- Sales revenue, sales volume, sales/ per project, sales/per month, etc.
- Profit, profit center, profit / client, profit / product, profit / campaign, profit / unit sold
- Costs, unit costs, carrying costs, cost / unit sold, cost/campaign, cost/staff, cost/sq ft, cost/ software seat, cost / profit center, cost/ department, direct costs, indirect costs, overhead
- Marketing investments, leads generated, lead conversion, lead: sale ratios, prospects/ sales calls/ sale/add-on sales
- R&D investment, cost/department, cost/product, training
2. Know the Lifetime Value of a Client
Define your criteria of an ideal client. Lifetime value of a basic client is $$ or $$$$:
- Stop&Shop knows you’ll come weekly and spend $50/pp
- Macy’s and Bloomingdale’s ideal client comes in 4-6 times/year and spends $200/$500 each time.
Which would you rather serve? But you can’t make a good decision about which customer to market to unless you have those numbers and you track them consistently.
If you don’t track those numbers already, start now. You can use every quarter of data you amass, to add value to your business , proving it’s worth every dollar you are asking for. All this tracking data is a deep resource for positioning and negotiating your exit.
Just like the imperative to have at least two years of clean financials before you are ready for an audit, you need at least two years of tracking data on your key performance indicators (KPI) to substantiate your forecast, projections and budget goals.