In business, measuring is one of those essential tools that allows operators to ascertain how their business is performing, where it could go, and what needs to be adjusted in order to achieve a better result.
It’s a key part of understanding and improving an operation to allow an operator to meet their goals. So, let’s look at what and when to measure, and how it allows business to adjust.
What to measure
In business we measure anything that “can go other than right”, and the best way to do this is through Key Performance Indicators.
In most businesses there are a minimum of three key areas that require measurement. These are:
- Sales (Revenue)
- Production (delivery)
- Cashflow (outgoings against income)
These form the basic measurements, but in many businesses there would be further measurements to be taken.
Say part of your business relies on salespeople, who you’re paying to do a job. You need to know how effective your team is as a whole, how good an individual is at their role and how well the script is assisting them in their task. Let’s look to the numbers…
In this case business would measure the following:
- How many contacts each salesperson has been allocated
- How many times an individual salesperson has contacted their lead
- Whether they managed to complete their sales script (if not how far through did they get?)
- How many times they asked their contact to buy
- How many sales they ultimately made
What the numbers say
As beautiful as a bevvy of bountiful numbers are, it’s understanding what they tell you and what you do with them that’s the difference between failure and success.
Let’s go back to the sales example above…
Part one might reveal the following:
- The contacts each salesperson receives are few and far between
The problem: Probably your marketing, possibly your appointment setter.
- Each salesperson receives lots of contacts but some do better than others at making it through their pitch
The problem: Possibly your sales script, but probably your salesperson, as some are having success.
- Each salesperson receives lots of contacts but few make it through their pitch
The problem: Definitely your sales pitch, possibly all your salespeople – and the person who hires them as well.
Adjusting, armed with numbers
Armed with a wealth of numbers operators have the insight to analyse the critical workings of business, allowing the opportunity to adjust.
In the case above a business may find the sales pitch needs revision, the salesperson needs a confidence boost, or the training needs to be honed.
Now we know the numbers and exactly what’s occurring, business can take action to ensure the result that business requires, asking a very simple question:
How do we change the action to get the outcome we want?
This question is a critical step in the measuring and adjusting chain. Numbers are useless if you fail to change the result.
The beauty of numbers
Put simply, measuring is imperative to business because, the numbers:
- Never lie
- Reveal what’s occurring in your business
- Illustrate what needs to change
- Provide the basis of how you need to change
While operations vary from business to business and industry to industry, the act of measuring will always achieve the same ends, enabling you to:
- Understand what’s working
- Ascertain what’s not achieving the desired result
- Adjust operations
The final word
Measuring is a regular and important part of the business process, but it’s useless if you fail to understand the numbers or change the action when required.
If you’re looking to define the key areas to measure in your business, or are seeking assistance understanding the results, Clive Enever is available to assist. You can learn more about his services here, or contact him for further advice.