Over the past eleven days we’ve looked at – and challenged you to calculate – some of the key business metrics (sometimes called KPIs) in your business.
These metrics are your guide. They represent the facts that will enable you to drive your business performance forward if you act on them.
If you don’t already know the top ten metrics that drive your business either from this challenge or my book Business Maths Made Simple block off some time this week and figure them out.
When you have identified which metrics matter most it is important to track them regularly and assign an owner to each one so that different members of your team (if you have one) have the responsibility of driving and improving that metric.
Next, create a clear visible dashboard to record your metrics. For each metric there are four data points which will give you the full picture:
- Your current actual performance.
- Your recent performance (where you have been during the last few weeks).
- Target, being the goal for which you are aiming.
- Baseline, being the absolute minimum threshold to hit.
But before you start to construct your business dashboard there are two key questions you need to ask yourself (and your team):
- How many and which metrics should you measure; and
- Over what time periods should they be measured.
There is no one size fits all answer to these questions. It depends on the nature and size of your business and whether you have a team to support you.
If you are just starting out on this journey or are a solopreneur with a small team, do not be too ambitious and try to measure too much too often. Less is more in this regard. Start with a few (3-4) metrics measured monthly and build from there.
In due course you should aim to have 3-4 key weekly metrics (we call them your vital signs) and 8-10 monthly metrics (we call these your scorecard) displayed on your one-page business dashboard.
As a general rule your vital signs should measure your key marketing and sales metrics and your scorecard should measure your profitability, cash, working capital and other metrics.
Your scorecard should contain 8 -10 metrics chosen either from this challenge or from the 20 listed in Business Maths Made Simple; any more than this and you’ll lose focus.
If you are struggling to identify these 8 – 10 metrics try completing the Desert Island exercise: “If I was stranded on a desert island with no connection to my business at all, but I could get a daily one-page report of key metrics, what numbers would I need to see to determine exactly where my business is at and the health of it?”
An example of the type of scorecard you might want to develop is available courtesy of my friend, the awesome Joanne Sparkes of Expedio at https://expediodata.design/scorecard, or you can design you own remembering the six key characteristics of good KPIs
- They are specific and measurable
- They are measured against a target
- They drive the actions in your business
- They are easy to understand
- They are tracked regularly
- They’re visible
So your twelve drummers drumming challenge is to:
- Identify your 3-4 vital signs and 8- 10 monthly metrics.
- Design your dashboard and scorecard.
- Start collecting and reporting your data.
Make it a habit to produce a weekly vital signs report and monthly scorecard; after several weeks you’ll start to see trends you can improve on to enhance your business performance.
Thank you for taking part in this challenge; please do let me have your feedback about whether it was useful and as always if you need any help just book a zoom call with me.