Measuring performance: Are you just guessing?
Maybe you’re familiar with the clichés that you get what you measure; you can't manage what you can't measure and what gets measured gets done.
Perhaps you’re already aware of the extent to which big companies are measuring performance by measuring customer satisfaction, staff productivity, product quality and so on.
Have you ever thought about the role of measuring performance in micro business? Or have you dismissed this thought because you’re already wearing enough hats as it is?
Consider this: measuring and monitoring your business performance is possibly the most essential hat you should wear in your business.
Think about something you really wish could change in your business, something that matters because it impacts business success. Is it getting more customers? Or finding more time for your dream lifestyle? Or increasing your profit margin? Or reducing the proportion of your time that’s non-billable? Or finding new leads?
Whatever it is, how exactly and objectively do you know how much it’s actually happening now?
"Measuring and monitoring your business performance is possibly the most essential hat you should wear in your business."
Do you know how many new customers you’re getting, on average, from month to month? Do you know how many hours you’re giving to your business, typically, each week? Do you know where your profit margin is now, and how that’s changed as time has gone by? Do you know what proportion of your time is billable (or directly revenue earning) and how that varies month by month?
Want more articles like this? Check out the measuring success section.
Do you know how many new leads you get for each marketing campaign you run and whether your hit rate is improving?
Do you know exactly and objectively how many customers you want from month to month? How many hours you want to give your business, typically, each week? How much you want your profit margin to be? How much of your time should be billable? How many new leads you want to attract, for every dollar you spend on marketing?
Unless you are measuring performance, you can’t know these things. You can’t know where you are now, and how far that is from where you want to be.
If there’s a result in your business you want more or less of, then measuring it regularly over time will give you three kinds of power you can’t have otherwise:
1. The power of focus, which will keep your attention on what matters most in your business rather than letting it meander and snap from distraction to time-wasting distraction.
2. The power of feedback, which gives you a balanced and objective reality check on where your business is truly at, so you don’t succumb to biased conclusions based on what happened today or last week or what your loudest customer said.
3. The power of a fulcrum, a way to leverage your efforts so you get bigger improvements in your bottom line for the same or less time and money, not frittering it away on sterile investments.
Sharper focus, regular and balancing feedback and a leverage-boosting fulcrum. We all need more of that, especially in small business. That’s what measuring performance does for us.
What is the one result in your business that you are, or should, be measuring?