Another thought this time of year when we are working on our business plans for the next year. We need to have clear objectives and goals.
You may have heard the expression, “If you can’t measure it you can’t manage it” Well, if you want to have a sustainable business you need to have a strategic plan, which includes those goals and objectives, and a way to measure your progress. Without these elements you are relying solely on luck.
What you measure is just as important as having and plan and executing it. For example, many business owners are familiar with the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization), or more simply said profit. That, however, is a measure of what has happened in the past. It may not predict what will happen in the future.
Using measurements that predict whether you are on the right track and will predict and shape your future are far more effective than relying on measurements of what has already happened. Let’s start with the measurement of customer loyalty. Customer loyalty is the measurement of how likely customers are to recommend your product or services to others. Customer loyalty has a direct correlation to future sales and profits.
Another forward-looking measurement is networking and lead development. What is the activity and frequency of activity that is required to have one conversion to a sale? It is important for you to measure the rate of activity that you need to get desired sales results. This rate of activity varies by industry, business, and business owner. It is important to track your sales development activities to determine the right level of activity to achieve acceptable results.
It is important to measure the results of your marketing and advertising activity. Business owners can waste substantial amounts of money on unfocused marketing and advertising. Before creating a marketing strategy make sure that there are measurements such as web site visits, converted sales, response to mailing, and the like.
If you have employees, make sure you measure the effectiveness of your workforce. This is done through clear description of duties and then holding your employees accountable for achievement of goals. Also, you should measure your staff engagement which is the employee side of your customer loyalty measurement.
Organize all the measurements that matter to your business results into one area and create a “dashboard” to monitor overall results. This serves the same purpose as your car’s dashboard. It is an overview to let you know about any malfunctions. You keep a dashboard to measure your performance against the goals you have set. In addition, you use it to track trends and make necessary adjustments in activities as needed.
This process really works. History has shown that businesses that have written goals, and measure and track those goals will outperform the competition.
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