The first article in this series listed several tactics to increase your business success. Each of the successive articles takes a closer look at one of those tactics. Last month, we talked about financial statements. This month we’re covering a subject vital to your success: Operating metrics.
Much of my success in every business I have been involved in comes from being good at tracking financial and operating metrics. Put simply operating metrics are the measure of how well a business is doing.
You should not be gathering the data to do a monthly report on your operating metrics. However, you must understand the operating metrics because you are ultimately responsible for every aspect of your business.
Please don’t gather the data and record your own operating metrics. It’s dull, so dull that if you do it yourself, you probably won’t keep up with it and will lose the benefit of having timely information about how your business is performing.
Delegate gathering the data and preparing the report to someone else in admin or accounting. Make sure that they have the data tabulated and a report on your desk by the 5th of the month. If you don’t know why you need it at the start of the month, review last month’s article about financials.
You will have operations data on the 5th, a few days before you get financials data for the previous month on the tenth. Don’t worry about not having the financials. Focus on the operational metrics. Your report should include key operational metrics such as total sales, sales per employee, sales per salesperson, total number of deliveries, average dollar of each invoice, amount of credits in dollars and as a percentage of the total sales.
Again, have someone else in your company gather your metrics and lay them on your desk. Then get your flashlight. Remember, wherever you shine it gets the attention. If you are not sure which metrics you need to be looking at, email me and I will send you a template with all the crucial ones.
The template will shows the prior months’ operating metrics as well, so study the past data to see what has changed. I promise your study will reward you with new insights. Then fly up out of your chair and go figure out why a key operational metric is better or worse than it should be.
Repeat this process every month without fail. Your time studying, analyzing, and acting on the insights will be the highest paid work you do because it will make the biggest difference on your bottom line per hour you devote to it.
Later in the month, on the 10th, you will get the financial results that score your performance on key financial measures. Again, get your flashlight out. Get ready to fly out of your chair! I used to eagerly anticipate getting my reports each month because I wanted to know where I we were excelling and where we were not. I was hungry. I could not wait to start solving issues and improving operations.
It is much more fun to be solving issues and getting results than to be gathering data and filling out a metrics chart. However, you cannot get to the fun part unless you have someone getting reporting on the key operational metrics. If you have not been looking at the metrics, commit to doing it. Start now. Email me for my list of key operational metrics.
Remember only you can make business great!
Ron Sturgeon, Mr. Mission Possible, has been a successful business owner for more than 35 years. As a small business consultant, he can wisdom and advice gleaned from an enviable business career that started when he opened a VW repair business as a homeless 17-year-old and culminated in the sale of several businesses he built to Fortune 500 companies.
Ron has helped bankers, lawyers, insurance agents, restaurant owners, and body shop owners, as well as countless salvage yard owners to become more successful business people. He is an expert in helping small business owners set the right business strategies, implement pay-for- performance, and find new customers on the web.
As a consultant, Ron shares his expertise in strategic planning, capitalization, compensation, growing market share, and more in his signature plainspoken style, providing field-proven, and high-profit best practices well ahead of the business news curve. Ron is the author of nine books, including How to Salvage More Millions from Your Small Business.
To inquire about consulting or keynote speaking, contact Ron at 817-834-3625, ext. 232, rons@MrMissionPossible.com, 5940 Eden, Haltom City, TX 76117.