Measures that Matter

It’s true that what gets measured, matters. Without measure how do we know is something is on track, falling behind, fits into our values, aligns with our strategy, or is even relevant to our goals, should we be spending time on it? 

In our personal life we hear a beautiful/profound quote/statement – that says – those who care matter and those who don’t care, don’t matter. 

What if we thought about these concepts in our own business or career? Could we move easier, faster or gain more momentum when really focussing on the measures that matter. 

Your Why

It’s been a decade since leadership guru Simon Sinek first introduced his concept of Find Your Why and it has been widely used ever since. How many times do we take a step away from the transactional nature of our business and consider whether our why still resounds or whether we need a new why… 

Whatever your purpose, your reason for starting your business the measures in business are very similar across size, industries, complexity the challenges of small business are very similar to big business and multi-national corporations, the key financial metrics are based around the three key business fundamentals of cash, profits and sustainability

Profit (gross and net) (monthly measure)

Cashflow generation, working capital ratio and coverage (weekly measure)

Financial Reserves (monthly measure)

Timing along the business journey.

The point of time in which you are at in your business journey will be important to consider the measures that matter to you. For example challenges for a new start up business will be different to those who have already secured revenue streams and perhaps already have retained earnings (profits). 

In the first 12 months of business the focus needs to be firmly on building foundations. Working out your product/service offering, pricing and early business models, identifying how much capital (cash) you have to keep your business going whilst you build customers and revenue.

Whilst you are building a stream of revenue, now is also the time to ensure that systems are in place, accounting tools set up, business structure and registration done, terms of trade, brand built, a lot to be done even before any profits are flowing, a minimum consideration of these set up costs are between $5k-$10k. 

Once you have completed your first year of business, this is the time where consolidation of products/services and pricing starts to form. As you build, you learn and that means staying nimble on the business model and whether your products fit into the market in which you work. Does your pricing need a review now that you have built confidence in being able to achieve work, this happens right, even though we probably should have set the pricing right at the start, there were reasons why we couldn’t, didn’t and wouldn’t…

Balance Measures, Moments & Momentum – they all matter.  

Often in business we can feel isolated, and this can lead to not knowing if we are on the right track. Sometimes it feels like we are doing all the right tasks and yet seeing nothing in return for our effort. This is why we need to recognise momentum, perhaps knowing that having 10 sales development conversations per week is going to allow us to convert three or four of those opportunities in the next 90days and therefore build our revenue pipeline. Often we will have a number of different products/services in different phases of their own life cycle all happening at the same time, and that is absolutely ok. Perhaps identify for yourself what products, ideas, services you have within each of these 5 phases and set yourself targets, measures and actions on how you will spend your time and precious resources across each of them  

Ideation – research

Creation – Build product, test, review

Launch – Pricing Plan, Communication Plan, 

Delivery – resources needed, production time, cash, expertise

Build – PR, marketing, funnel, conversion

 Review, Reset & Repeat

Leadership

One of the biggest challenges in owner managed business is not having a leadership team of executives or a Board to report to. For those of us who have entered our own business from the world of corporate (big business), we can often think of this level of management as an unnecessary expense. In many organisations this layer of expense is huge and can become a burden, slowing down decisions making and becoming difficult to deal with. However, the flip side of the argument of not having this layer of executive is that we do not spend enough time looking big picture, taking a step away from the transactional nature of being in our business all the time. We can be guilty of not spending sufficient time working on the business, planning the next sales cycles, spotting the opportunities or threats in the market before we get disrupted or worse still, fall over.

SWOT, PEST & GAP

Analysis – (previously written piece on mind the Gap – link to this – expectation, knowledge, leadership). Most of us will be familiar with the Strengths, Weaknesses, Opportunities and Threats analysis model. The PEST takes a deeper look at the external factors to our business, consideration of the environment, political landscape, social aspects which can also include demographics and finally the technological impacts to our business and market or industry in which we operate. These reviews need to be undertaken at least annually and with others at the executive level in your business or with a trusted sounding board, CFO, or business advisor/coach to ensure your thinking is being stretched and hypothesis tested, a job which cannot be completed single handedly. 

A Balanced Scorecard

Think of this as your business dashboard. Creating a powerful tool that delivers results to you in your business, on a regular basis (monthly) and gives you a high level view of the whole journey, from sales metrics, marketing actions, production and utilisation measures through to how you are creating value for yourself, your team and importantly your clients.  This dashboard is your guiding light and needs to have air time with you as CEO at least two hours each month, think about how you can hold you own executive review, even if it’s just you, take a step away from the day to day and look at the results from the outside, as if you were the investor into someone else’s business idea. What would be the questions that you would ask of yourself…