18 Apr Dashboard metrics to Keep a Pulse on your Small Biz Performance
What if you could avert disaster in your biz before it ever happens? With the right metrics to track your small biz performance, it actually is possible! Keep reading to find out how.
Is it actually possible to avert disaster BEFORE it happens in your business? I suppose so, but it is not easy! Entrepreneurs are human after all, and humans are flawed. Most of us allow ourselves a whole list of poor habits, from eating more than we should, to spending more money than we actually have, to procrastinating on tasks that are really important to our business.
How does today’s small business owner set his or herself up for success on a more consistent and–dare I say–“habitual” basis?
Using KPIs to track your small biz performance
I think the answer to averting business disasters before they happen comes from the ability to track key performance indicators (KPIs). From measuring what the numbers tell us in comparison to what our gut says.
Can you trust your data and trust your gut? Is this even possible? I have heard people say that your intellect may be confused, but your emotions never lie. Can we utilize both KPIs and our gut to make the right decisions for the success of our businesses?
These are some of the questions I have been pondering lately. They’ve come up as I did a round of speaking on setting up businesses with key performance metrics to help them improve business decision making capabilities.
The Fix This Next approach to small biz performance
The framework I use for this discussion is based around Mike Michalowicz’s book “Fix This Next”. Mike references Maslov’s Hierarchy of Needs for prioritizing air, water, and food ahead of safety needs and moving up that hierarchy to love and belonging, esteem, and finally, self-actualization.
In business, we have a similar hierarchy of needs. Mike calls it the Business Priority Pyramid. He says that at the base level of any business is the need for SALES, which results in the creation of cash. Once we have cash, we then need to create profit. From profit, we need order so that our business has repeatable systems and processes. From there, we leave the world of GET within our business and enter into the GIVE part of doing business. This is where we focus on the creation of impact, and finally, legacy. I see this play out in the lifecycle of my own business and personal life all the time.
The Business Priority Pyramid
Last summer, my family from rural Minnesota traveled to my Chicago suburban home for our annual family reunion. I was so excited to show them around so they could see for themselves that, though we don’t have acres and acres of space, we still have a welcoming and cozy home. To get prepped for the family reunion, I replaced some worn down furniture, did a whole house cleaning from top to bottom, and I tried really hard to make my backyard beautiful with plants and flowers. I suppose you could say that I was focused on Impact and Legacy before the reunion.
The big day came, and I had planned for all of us to go to an afternoon Cubs game. I was so excited for my baseball-loving family to experience the magic of Wrigley Field. We all met at my house for breakfast and visiting prior to getting picked up to head to the game. Suddenly, a pipe in my basement burst, spraying water violently all over the finished basement in my house! A literal rain delay had moved me from the stages of Impact and Legacy right down to my base need: to stop the flooding in the basement RIGHT NOW!
This same cycle happens repeatedly in small business.
We are working really hard at selling and we do it: we land the big sale. Then we get really wrapped up in delivering on our commitments for the big customer, so much so that we take the eye off the SALES ball. Then, we don’t have a pipeline of new opportunities coming in.
When the project is over, we look around and realize that we lost track of the creation of cash. Now, we are between a rock and a hard place. We picked up more staffing to complete the project, but there’s no new revenue coming in to pay for the new payroll cost. This is an example of a broken Sales foundation that needs to be fixed.
How Key Performance metrics help us track our small biz performance
This is why it is so important to keep our eye on the ball and set ourselves up with key performance metrics – so we are not caught in a situation where we have no fresh pitchers and three innings to go. Of all the things to measure in a business, I suggest setting yourself up with good, repeatable, habitual measurements around your Sales functions. This is the foundation of the business, the thing that you must repeatedly get in order to hire more, earn more money, and support your mission. Sales is the key performance indicator that creates cash in the biz and provides you with options to drive the business forward. Here are a few simple metrics that any size business should be tracking:
- Do you have a revenue/income goal for 2024 that will keep yourself fed and your team fed?
- Do you track the number of leads/sales opportunities coming in?
- Do you track how many leads you converted to a sale?
- Do you track customer/client complaints to see what complaints occur most frequently?
- Do you track who has not paid you on time (accounts receivables)?
This is an age-old ACDC problem that has a recognizable cycle in all businesses.
A method for tracking your sales cycle
ACDC is not just a really great band from the 90’s! It’s also a method for which businesses manage their sales cycle:
- ATTRACT clients/customers to your business
- CONVERT them to clients
- DELIVER on the commitments you have promised to them
- COLLECT the rewards (get paid!)
As a business owner, understanding and building repeatable processes around these 4 actions (to attract, convert, deliver, and collect) is the critical and foundational piece to staying in business for years to come. Next time your gut starts throwing you sliders, I suggest that you use that intuition to revisit your KPI’s and what they are trying to tell you. Chances are, you have an ACDC problem. The trends from your dashboard can tell you the story.
Returning to this base need of the Creation of Cash will make your business a winning team every single time. As an entrepreneur myself, I know the daily struggle of staying on track. I may start out in the morning with one important task to do for that day. By the end of the day, I look back at my hours of work only to realize that I got distracted from that one big thing and never completed it. By always keeping this ACDC framework in mind, I believe it you can shut down the noise in the other parts of your business and stick to the facts. Your KPIs will indeed help you pitch a no-hitter.
Want to learn more about KPIs for any size business? Watch the recording of my recent discussion for the City of Chicago’s BACP Workshops Webinar Series below.
