Traditionally we always measure something, following the results, compare those results with specific targets and make decisions about the future steps.
This is the only way to increase our knowledge about questions like:
- Is our job good or bad?
- Is it a success or not?
- Do we need to make corrections on our actions or not…
When you are an entrepreneur measuring becomes one of the most important tasks for you. You need to know the performance of your business, you need to know areas where you can implement improvement, you need to know why you make a progress and why you did not make a progress…
Let’s look at one possible process that you can use for the more strategic and systematic implementation of the measuring.
1. Evaluate the measures you follow.
Do you have a strategic approach when you follow measures about performances of your small business? I know that you follow your numbers about the sales regardless if they are in traditional notebooks or some more complex database. But, the question is about the strategic approach that means you have a process that you follow on a cyclical basis. For example, at Sunday evening you will collect each measure to compare them with a previous week and to find answers why some measure is lower or bigger and then to make a decision for the next week actions.
Now, when you have something like a strategic and systematic approach we come to the question what type of measures you are currently using. Probably you have three, five, or ten measures that you are using, now list them on a piece of paper or some type of spreadsheet and start asking yourself the following questions:
- What each of those measures tells you?
- Which measures are good measures and which of them is something that doesn’t add value to you as an entrepreneur and your small business as overall?
- Are there other measures that you are not using currently and they can be valuable for your small business in the future?
When you complete answering these questions, you can simply remove measures that are not valuable for you and will add additional measures that really can bring you more value when you make decisions in your company.
2. Define one most important measure for your company.
Now when you have three to five important measures, you need to choose one that will tell you the most about the performances of your business. This measure must be something on which you can fully rely on it, something on which each employee in your business can work to improve it, or something that you can continuously maintain on the higher possible level that will enable you to be one step ahead from your competition. Do you have such a measure? Think about it now.
3. Create your own process that will always confirm or reject a specific measure that you are following.
Now, when you know what you measure in your business, and you know the most important measure for the success of your company you can simply start building a process that will enable you to use measurement on a most useful and productive way for you and your business.
The first step in the process will need from you to start with that one most important measure for your small business that will be followed on an everyday basis. The start of the process also can be other measures, but they will be part of this process on a longer cycle as each week, or each month, or each quarter. You will need to decide about that according to the importance and priority of each of the measures that you have defined in the first step of this process. The third way of the possible starting point of the process can be your customers as one of the most important and most powerful persons in your business.
Next step in the process is to discover how you can improve the measure that you follow. For example, you will need to define concrete action steps that when they will be implemented, your measure will be improved. Then, your process will continue with the implementation of previously defined action steps that means the implementation of changes in your small business.
The next stage or step in the process is to measure the effects of the implemented actions. The output can be positive, which means that everything you have already done brings improvement in the measure. The second type of output can be negative which means that the actions you have already taken aren’t something that improves the measure. For the negative results, you will need to go back at the step when you work on discovering what you need to do to improve the measure.
4. Continuous work on process improvements.
And as the last thing you need to remember is that you need to work on continuous improvement of the process because this process is important for your business success.
Question: How you are measuring business performances in your small business?