Facts and feelings are both clarified when real data in your company is examined and analyzed.

And remember “you can’t manage what you don’t measure.” That simple sentence couldn’t be more true.

You can even easily measure things that are seemingly intangible.  Use Net Promoter Score to measure employee and customer satisfaction. Just asking the one simple question: “How enthusiastically would you recommend our company to your friends?” is enough to measure each area more completely than a dozen other metrics, especially when using this formula to calculate the results.

pic Nick Sayers

Once you know what key numbers to measure in your company you then need to decide who will be responsible for them and how often the data will be reviewed, whether it’s daily, weekly, monthly, or quarterly.

The key to making these metrics work is having a good single point accountable or “SPA” person that can really dig into the different areas, rather than you simply “playing businessman” and watching the reports instead of proactively growing the business. With regular attention to metrics, you’ll be able to notice important patterns, some of which may service as warning signs or opportunities for growth.

Measurement doesn’t have to be too sophisticated; one simple thing I do to help decide what metrics to even measure is build a simple spreadsheet with columns showing the metric in question, who is responsible for it, when it will be reviewed, its status, and so forth.

Once a year I have the CEOs I mentor look and examine the frequency of the metrics they are measuring.  It’s key to adjust how often you’ll review each one going forward.  Did you have enough data at your fingertips this past year?  Would more or less frequency for each have helped you? Make sure you answer these questions.

Remember: don’t turn this into a paper-pushing exercise or “analysis paralysis,” either. Keep it simple.

Most companies either try to measure too many metrics, or they measure none at all.  Even those companies that only measure a few key things rarely look at their numbers enough in any meaningful way to give themselves any insight into the numbers.

We’ve all heard the saying before: We can’t manage what we don’t measure.  However, the key is figuring out the “five w’s of metrics”: who should measure metrics, what to do with the data, when to look at these numbers, where to look for data, and, of course, why to measure at all.

Here are the absolute best basics to get you started.

Each business area of a company should have its own dashboard for metrics that rolls up to an overall dashboard for the entire company.  To start with, though, think about what key numbers each business area should look at in order to determine if they’re successful and staying on track.

An easy way to come up with a list of key metrics is to sit all the people from a business area in a room.  Show them the key goals for the company for the year and ask them to write down as many metrics or “Key Performance Indicators” (KPIs) that they think their business area should measure.  Once you have this all-inclusive list, you’ll easily narrow them down to the TOP 10-15, and even the most critical TOP 5 meaningful metrics for that area.

Once each business area’s metrics are nailed down, you should also be able to assign two to three key numbers to each person in that area.  What are the key data points you can measure to help keep people focused, grade their performance, and keep them aligned with the important areas and numbers for the business unit they work in?  In my role as a Business Coach or Business Mentor I have to help CEOs see the data they should be looking at.

Remember: it’s not about measuring everything.  It’s about measuring and monitoring the right things.

When I was 21 and running my College Pro Painters franchise, I knew I wanted to make $12,000 profit that first summer (this was good money in the 80s – today’s College Pro franchisees can make $50K in one summer). To do that I actually reverse engineered my entire summer’s production to give me the profit I wanted.

Aside from the amount of jobs I needed to land and number of painters I needed to hire, knowing my exact gross margin per labor hour was absolutely vital to achieve my goals.

Measuring productivity per hour is often overlooked in many companies. People think bigger projects or consulting services can’t operate like that. I disagree. Tracking revenues produced per hour can be a great financial guide for your entire company.  It allows you to find ways to be more productive and efficient, and constantly look for areas of improvement. This has been one of my grounds or basis in coaching or mentoring CEO’s in running their businesses.

Not measuring your past company metrics to gauge future projections is the equivalent of paying one of those weird fortune tellers at the carnival to tell you how to run your company.

I always advise the CEO’s that I coach to avoid this common trap by using lagging and leading indicators.

· Lagging indicators measure what’s already taken place, but they don’t forecast the future

· Leading indicators give you a glimpse into what is coming your way

You want to be able to track and measure numbers that give you both lagging and leading data, and then use them to support your decisions.

Your company’s metrics should be hosted live on a company intranet. Have a finance person be the person pulling the data together or making it look great on spreadsheets, while holding people in each business area responsible for ensuring the data for their respective area is updated on time, accurate and regularly reported.

Prior to building, purchasing, or even using dashboard software or web applications, I always mentor CEO’s to start using good old Microsoft Excel or Google Spreadsheets (which can then be easily shared with others). It will take you about 6-12 months of using and reviewing the data to really know how you want it to be represented.

These indicators should be easy to view so that only the outliers should jump out at you – meaning the numbers that are below or above your specified threshold for various metrics. There is no sense in wasting time reviewing numbers that are right where you want them to be, so have the others jump out at you. Play with each metric over the course of a year and, if possible, ask other companies what they use.

If you’re not a numbers person (common for entrepreneurs) here’s an encouragement:
IT’S EASIER THAN YOU THINK!

Don’t put it off.  Measure your way to bigger growth and profitability.

pic Future Forecast