Most business owners rely on simple income-minus-expenditure to guess how well their business is doing, for others, it is how much money they have in their bank account and for the remaining, they simply do not care to measure progress at all. Below are three reasons why you should clearly define your business metrics and communicate these metrics clearly to your employees.
It is easy for day to day activities such as running errands, placing calls to customers and supervision duties to swallow you up as the top manager of your small business, causing you to lose track of the progress of your enterprise. Recent random surveys we conducted reveal that 8 out of 10 business owners don’t know the metrics or indicators by which to measure their performance. Out of 20 employees from the 10 businesses visited, 16 employees were completely blank about the metrics of their workplace, and only 2 employees out of the 4 remaining employees knew the metrics of the business as stated by the employers.
Unlike building or construction where progress is measured by the height or level of the structure, building a business or a brand and monitoring its progress can become almost a nightmare for most startups and business owners for one simple reason! You don’t have a well crafted out business metric structure.
1. Clarity Of Vision: Knowing the indicators that define your business progress helps you see the future of your business in a more lucid picture than you would from a clustered business model. Having full knowledge of the pillars that hold your business curve allows you to know where to tweak when you need to make a change in your growth pattern, just like the weatherman who measures elements of the weather and is able to tell when the next rain would fall.
*Business Metrics make forecasting more effective and likely to be true
2. Track Your Growth Curve : Keeping a good record of your clearly defined business metrics allowing you to plot your metrics along a time-value graph to map out the performance of your business within a given period. This informative and factual growth curves serves as basis for you pop a champagne at the end of a period, or call for an emergency strategic meeting.
*Business Metrics tell you how well or otherwise you have performed so far
3. Good Customer Relationships : Your business is as important as the people who patronize your goods or services, therefore knowing in details your customer inflow details is a point that cannot be over emphasized. How much a particular customer has spent on your business since its inception may be reason for you to treat that customer differently or award special discounts to this customer where the need be, but how then do you know this if you do not keep track of customer inflow data. Also keeping customer inflow-data allows you to tell the frequency of new customer acquisition, identify loyal customers and also spot runaway customers.
*Business Metrics informs you who your loyal, frequent and runaway customers are.
So you see, business metrics goes beyond Money-In-The-Bank, and identifying and keeping proper business records puts you in a position to measure; for If you cannot measure, you cannot manage.
Written by Abdul-Moomin Shahabdeen