You can’t manage what you don’t measure...

Last week, I was at an advisory board meeting for one of my new clients. This client has two different divisions with two separate operating managers and it was the first time both managers were presenting together.

The first manager went and listed out several dozen monthly numbers for sales and expenses. She had nice graphs showing lines going up and to the right. Many of them had rolling averages and YTD comparisons that made everything look very successful.

The second manager went and presented a completely different set of numbers with different charts and different comparisons. Some of which looked better, others of which looked worse.

The advisory board began asking some questions, but it quickly became apparent that nobody could make sense of the situation or really understand what was happening in either division.

The two sets of information were from the exact same company, using the same business model, just selling to two different markets. They were using very different numbers and metrics to measure the business, which was making it impossible to comprehend the situation.

Unfortunately, this is not uncommon. It’s easy to print out reports for accounting systems and make pretty charts and graphs that look like things are going swimmingly.

When we started to dig into the numbers, we saw some key information about what was actually happening in each division. We found important differences in their operations and performance.

The fact remains: you can’t manage what you don’t measure.

In this case, the “what” was undefined. And by defining a handful of important measures that drive your business— inventory turn, gross profit margin, cost of sales, and warehouse labor to name a few—you can keep an eye on the metrics that matter most to your success.

Recently, I wrote an article for Inc.com about several key metrics that any business can use to create insight on performance.

While every business will have several unique metrics based on their model and strategy, these are five that can be used in just about every situation.

Here is the article…

Struggling to Make Sense of Your Company's Financial Data? Here Are 5 Key Financial Metrics You Need to Know

Don’t have a good set of metrics for your business?

Start with the five in the article, then ask yourself: what is key to our success? Create a list and select the top 8-12 to look at daily. Adjust them as you see new insights and as your strategy develops.

Need help? Send me your list and we’ll jump on the phone for 30 minutes. I’ll help you select the best ones for you situation. Click here to book a time in my calendar.

Bruce
bruce@eckfeldt.com
Cell: 917-385-7330

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