People that are serious about their business manage their business by numbers.
When it comes to business you need to manage your business by objective data.
Numbers provide us with the most objective data we can get from our business.
It’s important to use objective data because you cannot improve what you cannot measure.
Without measuring your business results, it is impossible to know exactly what to work on.
This is where many people get into ruts in business.
They spend so much time working on improving their business without really knowing where to start.
The don’t measure their results and then they get frustrated because their business isn’t get the results they want.
However they aren’t measuring results so they switch from working hard on one thing to working hard on something new.
They continue to make the fatal mistake of not measuring their results and so they don’t have any data that can let them know if what they are doing is working.
Then they get frustrated that they aren’t getting the results they want and they continue in a cycle of working hard and never getting the results that they want.
Whew, I get tired right now thinking about this round robin approach to fixing what’s broken in business.
The first step is to choose what to measure.
Every business is going to be different in what is important to track.
Here are a few guidelines on what you should track.
- How many new leads are you getting per month?
- How many new customers are you getting per month?
- What is the average transaction dollar amount per new customer?
- How many times are customers buying again from you per month?
- How much profit is your company making each month?
- What is your monthly operating expense?
- How many months of cash does your business have?
There may be a few other numbers you track but I would recommend that you track only five to ten numbers on a regular basis.
If you track more than ten numbers you will be tracking too many data points and the data will become less valuable for you.
Here is the amazing thing that happens when you start to track the important numbers in your business.
You become aware of the most important things that contribute to the success of your business.
Now you are observing what is happening.
When your numbers indicate that you’re not getting a result that you want, you can begin to investigate why you are not getting your desired results.
As you continue your investigation you will find out the root cause of the problems in your business and you can then fix the problem.
Now you are following the feedback loop that your business is giving you.
What you measure you improve.
If you’re looking to grow your business profits and having more cash in the bank, send me an email at firstname.lastname@example.org with “PROFIT” in the subject line… tell me a little about your business and what you’d like to work on together, and I’ll get you all the details!