Posts tagged with: measure
Every business owner intuitively has a sense for their metrics. When you identify those metrics and quantify them, magic happens. Your magic ‘operational dashboard’ that will transform your business 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. Make a list of your company’s key metrics. These become your personal ‘magic’ dashboard.
Simply by measuring something, it can improve. Draft your own operational dashboard to track performance and exactly how your business is performing overall. Start measuring performance against key metrics you need to hit or industry standards, financial standards, etc.
Everything that you track and measure will:
- Improve productivity
- Increase in value
- Demonstrate what was intangible value
- Provide the data to spot and fix problems faster
- Strengthen the core of your business
- Validate forecasts
- Increase the value of your business
Prove it to yourself. Pick 3 things significant to your bottom-line. Measure, watch and track them for 30 days. See what improves.
The fourth quarter is a perfect time to review, refine and revise the metrics you want to track and measure for the coming year to hit your numbers and achieve your goals. Don’t wait until January to start thinking about what you want to improve. Instead, make your plan, share it with your team and be ready to execute starting on January 2.
To ensure your company will survive and thrive and meet the demands of your market, customers and vendors, you must work on the business systematically and analytically to build value in every area. If you don’t know where to start or if you don’t know what metrics to track to improve your business, call 508.820.3322 or email us. You can also check out our 12 month program, Build Your Business Value.
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.
Wherever you are in your company lifecycle, start thinking now about the value of your company in the marketplace.
If you are a fast-track startup, showcasing your value and tracking your increasing value will make you a very attractive investment opportunity when you seek growth capital. If you are an established firm, clearly understanding the value you bring to the market will help position you as the most appealing acquisition/buy candidate in your space.
Value enhancement is not just a cleanup effort before the buyer’s appraiser comes in in the transaction process. Value enhancement is an overarching strategy to build a stronger, more robust company.
Here are 10 key questions to think through to maximize the value of your business.
- Who are your top 10 most profitable customers? Look at your 80/20 split.
- Who (what other customer) can move into your top 10 – if a client moves on/stops ordering?
- What new product or service could you add, break out as a paid add-on to increase revenue?
- What possibilities have you considered to accelerate your current business?
- Which (if any) of your sales are difficult to collect on? Identify those sales with high internal costs to get paid. Lower-cost orders/sales are less of a burden on the books/balance sheet.
- When do you identify customer complaints? When do you fix them?
- When was the last time you reviewed your pricing structure?
- Do you know who your top 20% of customers are? Why are they your top 20? Do you know your bottom 4%? Do you know what they cost you in time, staff, materials costs and goodwill, etc.?
- How current is your technology? Where should you update or upgrade technology to boost the bottom line?
- In your business model, what % of your sales is tied up as deferred income?
Your answers identify the numbers, activity and results that can provide value enhancement to your business now.
An exit plan to sell your business is more than a transaction. When you understand that there are five stages to the exit process and that there is a systematic way to move through the whole process without getting overwhelmed or discouraged, you can relax and simply ‘work the process’. That’s what these five exit strategy stages are all about.
Exploration/Evaluation – This where all your exit planning happens to understand the scope of work to do, the opportunities and timeline involved to achieve your exit to reinvention.
Growth Process Implementation – To maximize value of the business and build a deep foundation to make the business buyer attractive, you need to put a growth strategy into motion. If you sell the business as is, the buyers can’t see the future value to them in what you do now.
Exit Integration – The exit transaction is the culmination of all your planning, preparing the business and your team for your exit, maximizing value and determining the kind of exit you want and the terms you want to exit, along with the terms, timeline, cashflow for your reinvention.
Track & Measure for Excellence & Value – Tracking and measuring are the only way you ever know if you are getting the results you want. Tracking and measuring also help you raise the bar and add value in the intellectual property you own and the goodwill value you’ve built up in the business. Tracking and measuring is an essential toolkit you must employee, refine and promote to buyers to demonstrate your team and business excellence and the value they are worth.
It may seem that I’m beating a dead horse here. The reason I’m putting so much emphasis on tracking and measuring is that so many business owners ‘never get around to it’ and wonder why they are floundering and don’t know what’s working and what’s not working in their business. Without data, you can’t make the best decisions.
The more you refine your systems, processes and procedures to improve results, tracking and measuring help you to:
- Take away stress
- Sleep at night
- Reduce mistakes
- Make better decisions easier
- Outsource/delegate any task in your business faster & cheaper when you set up systems to track and measure
- Increase efficiencies
- Get more done
- Move more off your plate
- Get more time to plan and lead
Why Don’t We Use Tools To Track And Measure The Profitability Of Our Efforts?
Why Don’t We Track And Measure Every Effort With Prospects And Clients?
The answers are many, wide-ranging and constant. We:
- Are Too Comfortable
- Are Resistant to Change
- Assume it will be too complicated/complex even before considering options
- Presume all this is prohibitively expensive
- Supported in our old ways that keep us out of control, overwhelmed, paralyzed, in a rut
Which ones apply to you?
If you have not cashed out at your target number, at least one of these blinders may still be in your way.
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