What’s the best bet for keeping score in a winning business?
Technology in sports today is increasingly sophisticated and enables monitoring of individual and team performance to levels unheard of even 10 years ago. We now take basic score keeping for granted and we see an instant array of data available for immediate analysis and magic eyes to challenge the decisions of human score keepers, umpires and referees.
In business it is much the same. In organizations large and small, or any fast-moving workplace, how easy is it for any of us to forget to do the basics? Many extremely useful business metrics don’t require any technology, other than simple personal discipline to test and measure, every day, every week and every month. It seems like a major undertaking at the start but like many tasks, when organized, established and routine it takes just a few minutes a day. The benefits of keeping score are eye-opening and powerful.
A “Dashboard”, just as the one in your car that tells you what’s going on, will give an instant perspective on your business’ performance for the previous week or month. The content will vary from business to business, however typical content might be as follows for the past week:
Keeping Score – Sales:
How many Leads did you receive?
Where did they come from by source? (eg referrals, website, print ads, telemarketing)
How many unit Sales did you make?
What was your Conversion Rate?
What was the Revenue of your Sales?
What was the Average Value per Transaction?
Keeping Score – Financials:
Did you hit your weekly Breakeven?
What was your Gross Profit?
What were the Cash Receipts?
How many Debtor and Creditor Days did you have at the close?
Keeping Score – Operations:
How many Direct Labor Hours were available for production or service delivery?
How many Direct Labor Hours were invoiced this week?
What is the Measure of Time Expected versus Time Taken on jobs and tasks?
What is the Percentage Right First Time?
What was the cost of Waste?
It’s tempting to focus on the completion of a “Dashboard” as a goal in itself. However without regular review there is no reflection on the wins, challenges and learnings for the week. It makes sense to set time aside to do this at a regular time each week and compare the results with pre-set targets which are stretching yet achievable and realistic. Some of these might be “Key Performance Indicators” looking at activity, whereas some will be outcomes or “Key Results Indicators”.
Measurement of Operational Performance can become more complex, however the simple difference between paid for labor hours and billable hours that appear on invoices (when multiplied by charge-out rate) may give a Blinding Flash of the Obvious in terms of lost profit each week. Maybe there is a need to generate more orders to fill the capacity? Maybe there are overtime costs that you can reduce? Or perhaps it’s a timely reminder to just raise the bar in productivity and re-engage the team.
Whether there’s a need to focus on more sales activity, sales performance, more marketing effort, better cash collection systems, or operational efficiencies, the old adage applies: “You can’t manage what you don’t measure”. Need help with setting up your dashboard and keeping score? Get in touch with me.