Measuring the Effectiveness of Your Business Results
Recently, I met with a client to discuss how to effectively manage the performance of her staff so that she could effectively measure the results of her business. Sounds simple enough right? Read on!
My client didn’t understand that while her staff was working, she truly had no idea as to whether or not the work that they performed had a significant impact on her business’ overall profitability. Each person had a role and they pretty much did what they thought they should do each day, and the company made money but there was no way to measure the effectiveness of the work performed and its impact. So my role was to help her put structure around accountability for her organization. So what came first, the chicken or the egg?
In her case, it was the chicken, her business. She had a structure in place and people working in the roles, for which she hired them, but she had no business goals, so what were they driving to? Apparently nothing! First and foremost business goals need to be established in order to achieve the success you want for your business. You don’t need to have staff to establish goals but you do need to create a roadmap for where you want to go. Goals are essential to achieving…anything! You also have to know where you’ve been in order to know where you want to go. Past performance does dictate future success. So, we looked at profitability the years prior and I began to ask her questions about the work that she and her staff performed. I asked questions like, what percentage she wanted to increase her profits by, how she anticipated increasing them and what she needed to do in order to get to the number she quoted. I also asked her what drove business results the prior years; in other words, what activities had been performed to get the results she achieved. Taking it a step further, I asked what percentage of those efforts actually brought in business. Understanding the things that drive your business results is essential to measuring success.
My next task was to take those items that brought in business and create business goals. We identified approximately how many of those items were actually done and how often, then we outlined how many should be done each month and how many for the year. The next step was to identify which of her staff should be included in helping the business to achieve those goals. This is where we were able to establish goals for her staff and how their goals tied to the company or organizations goals. We gave each business activity a timeframe for achievement and quantified each of them. Then there is accountability.
I know what you’re saying right now, she has her own business, she only needs to be accountable to herself, it’s the reason she stopped working for someone else. The truth is, when we as business owners worked for someone else at one point in our lives, we needed to be accountable to someone and the same holds true when you own a business. There is always someone that you need to be accountable to in order to drive results. For instance, your customers, without them your product or service would never be recognized. Then there is your staff, without them, you don’t have a business because someone needs to help you with the work; and if you are a solo-entrepreneur, you need to be accountable to yourself because you are the person doing the work. And ultimately, you need to be accountable to your business; treat it like your baby and nurture it, after all, it does provide you with income to sustain your life. So what does accountability look like?
In my client’s case, I met with her bi-weekly to coach her on the activities that she needed to perform in order to drive business but we also met monthly to go over where she is with her business goals. This means that she was meeting with her staff, weekly, or bi-weekly to manage their performance and understand where they are with their contributing goals. I know, you’re saying right now, “that’s micro-managing.” Call it want you want but it helps to drive accountability and achieve desired results, and its only one example of how you can create accountability in your business. My business partner and I follow a similar formula in terms of organizational goals, how profitable we want to be and the activities that we need to perform consistently to get to where we want to be. We meet monthly to go over our individual goals; we call it an “accountability session.” Just the word “accountability” alone drives us to do the things that we need to do in order to create the success we want in our business. Neither of us wants to get to our individual accountability session not having done the activities necessary to drive results.
So what have our results been and what can my client expect as the result of measuring results, a strategic approach to business growth, a structure that ensures business growth, processes that drive activities to get to our goals, people engagement in the work and the rewards of profitability and recognition for a business that is successful!
So, what does your measurement dashboard capture when measuring the results of your business?