So far this month, I've discussed various ways to prepare and strategize for the upcoming year. In particular, I blogged about goal setting and commitment, and determining your raison d'etre. Today, we continue this trend by examining key metrics.
"What gets measured, gets done" is a well known business expression. It means that whatever you ask your staff to measure in terms of their work load will be their focus. So, of course, you want to ask your employees to measure the most important aspects of their jobs. Additionally, properly measuring these numbers allows you to keep your finger on the pulse of your business and make appropriate adjustments, like a car's dashboard.
Determining your metrics is trickier than it sounds and is often an evolving process. At my law firm, we are continually refining and adding items to be measured. If you are not tracking key numbers already, then I recommend starting simple. Perhaps, two items per person. Figure out what you want them to focus on and what data would be helpful for you to read. As you do this, it will be easier to add items and refine categories.
There are four categories of metrics. First is sales and this is the category that most companies do a good job measuring. Sales metrics include lead totals, conversions rates and cost to acquire a customer.
The next category is profit and loss items. Look at your P&L statement and figure out which employees are responsible for which vital items. For instance, my office manager Rosemarie is responsible for expenses and she has a category of responsibility called "Expenses Saved." Each month she figures ways to reduce expenses and then adds the savings to this column in her spread sheet.
Another category to measure is customer satisfaction. Surveying customers on how you are doing is the best way to measure this item. Keep the survey short and don't forget to ask the two most important questions: "Would you recommend our firm to a friend or family member?" and "Why (or why not)?
The finally category of metrics is performance. This is the most overlooked category by business owners but is clearly just as important as the others. Even though you are selling well, are running a lean operation and have satisfied customers, you still need to know that your employees are producing the work at an acceptable rate.
You can successfully run a business without measuring any of these items. However, you can also drive a car without checking your speedometer or gas gauge. Just like having and heeding your car's indicators makes you a better driver, having and relying on key business indicators makes you a better business owner.
Matthew Weiss is an admitted business learning junkie. He reads only business books and magazines (well almost only) and attends dozens of business workshops, keynotes and panel discussions each year. In this blog, he provides quality, take-home value from "all of the above" and shares his personal thoughts and experiences. Weiss is a New York traffic lawyer and sole owner of Weiss & Associates, PC, a boutique law firm specializing in vehicle and traffic matters throughout New York State. He is also the former Global Learning Chair for the Entrepreneurs' Organization. He can be reached at email@example.com.
He can be reached at firstname.lastname@example.org.