By Hugh Stewart
Business metrics development is a huge portion of planning your operational design. Business metrics are simply the production numbers in your business that are important to you.
What are production numbers? If you are a service-oriented business, that may be the number of phone calls to prospects needed to hit certain sales goals. If you know how much you charge in general to develop a solution for a customer, then you know how many customers you need to touch and talk to over a given period of time to be able to get a certain amount of money.
Metrics are the numbers that you, as a business owner, need to know. In my case, one of my businesses cashes checks. I cash 43,000 checks every year. I know what amount of checks need to be cashed by what month to know if I will meet my annual number. If I do not hit that number, I know I am behind.
I know how much in money order loads I have to have by Wednesday to hit my weekly number. I know how many customers I need to be able to see in any given month. I know how many new customers I must have coming in by the 15th of every month, etc. These are the numbers that matter in my world. What are the numbers that matter in yours?
Write down your numbers and review them often. You need an in-depth understanding of your business numbers and review as appropriate for your business. That may be every week or every day — certainly every month at a minimum.
If you are in the stock trading business, reviewing your trades every day the market is open may be appropriate to ensure your trading plan is working. Whatever the metrics are, you need to have a regular schedule for keeping track of exactly where your business is and knowing the numbers that drive your revenue.
It is not simply about tracking how much money you earn, it is understanding exactly where you need to be with your production numbers and understanding how they drive revenue. Once you understand the metrics, have a system for regularly reviewing, you can start to improve your system and business processes.
As a coach, one of the most important things I do for my clients is help them develop and measure the success of their operational processes and systems. This component is such a large portion of their material success that we devote time to understanding and creating it.
Hugh Stewart, founder and CEO of Confident Solutions Coach, has both a substantial education background and diverse entrepreneurial background. Stewart was not only a nuclear fuel designer, but he has created and operated more than 17 businesses in the past 10 years in industries such as money services, real estate, advertising, reinsurance consulting, and coaching. Stewart seeks to help business owners who are struggling or simply wish to move their business to the next level. You can reach him at firstname.lastname@example.org.
Originally published: Sep 12, 2011