We all know metrics are important – measuring them is an essential tool for business growth. The resulting information:
• Provides key insights into what promotes success and what leads to failure.
• Reports progress
• Guides decision making
• Encourages change for improving
As new tools increase your capacity to track multiple factors, however, the sheer numbers become overwhelming. Learning how to choose which metrics are the most suited to your business becomes essential. Before choosing which metrics will work, you need to understand the basics of metrics and the ultimate goal of measuring them.
The purpose of measuring metrics is to analyze your company’s movement toward attaining its business goals. Since every business is different, choosing from a list of so-called “top” KPIs (key performance indicators) isn’t necessarily helpful. Choosing the wrong ones can derail you, rather than promote forward progress.
Choose your metrics based upon your company’s priorities: know your business.
• What are your core values?
• What is your vision?
• What is your mission statement?
• What are your criteria for “success?”
• What aspects of the economy will have the greatest positive impact on your business this year?
• What can you do to encourage those areas?
• What aspects will have the most potential for negative impact?
• What can you do to avoid those areas?
• What are your bottom line objectives for each quarter?
Now that you know what you want to measure choose metrics and tools that:
• Provide real time feedback: invest in tools that collect and analyze current data, providing instant access to results.
• Provide Comparison: being able to compare present statistics/measurements to past, indicating stagnation or growth. This is primarily in the form of ratios and rates which, when graphed over a period of time, also reveals whether a trend is temporary or long term.
• Promote Understanding: the numbers you track should be easily understood. Employees and management should be able to readily know what they are looking for and comprehend the results. They should also be easily understood by an outsider – for example, a potential investor or business advisor.
• Result in change: Knowing what to do with the results is critical. The numbers you track should clearly indicate the changes you need to make in order to encourage even more growth or ward off impending downward spirals.
Avoid typical downsides of metrics.
• Too many metrics: trying to focus on more than five – ten KPI at one time only creates overwhelming confusion
• Metrics resulting in inaccurate or incomplete data: this prohibits understanding and positive change for the future.
• Complex metrics that are hard to understand: lack of understanding hinders the purpose
• Metrics that complicate your company’s daily activities and generate unwarranted overhead: tracking metrics should increase efficiency and overall profit, not the opposite.
As your business grows and changes, reevaluate and adjust your metrics accordingly. Taking time to evaluate your business and choose metrics that provide the information you need to change and grow will consistently increase your ability to make healthy critical decisions and increase your company’s bottom line.
Contact Springborn. We provide top tier candidates who understand the power of tracking metrics to fill the positions that open as your Bangor or Portland, Maine business continues to grow.