*Originally published on CommercialIntegrator.com
Swimming through the sea of numbers to figure out how revenue, gross profit and expenses will lead your company to sustained success.
Business metrics have become all the rage across the corporate landscape these days, with everyone trying to measure everything they do from the first time they contact a potential client to well after the project is completed and the next one is on the horizon.
But, with all those things out there to measure, is there a danger of information overload? Sure, but you can prevent that if you focus on the most crucial metrics and actually use the information you get from those metrics to make changes where they’re needed—when they’re needed.
“You need to educate people on why metrics are there,” said Navigate Management Consulting managing partner Brad Malone in an NSCA webinar this week. “A lot of people just measure to measure. We do it to make thoughtful decisions.”
The biggest issue with business metrics, said Navigate principal consultant Jay Harris, is how many of them are available these days. It’s impossible to use them all, but it’s tough to know exactly which ones are the best in terms of keeping your business surviving—and eventually thriving, he said.
“Many company leaders suffer from ‘alarm fatigue,’” said Harris. “That creates the risk of ignoring issues they should have seen coming. Priorities are everything.”
Navigating Business Metrics
The key to using metrics to their full potential is seeing what they measure and analyzing what the data tells you so you can adjust to help your business’ bottom line, said Harris.
That comes with setting a clear direction and vision for the company, enacting a strategy, putting together tactics, looking at the dashboard and taking action on what you can control, he said.
Business leaders should start with revenue, then plan for an acceptable gross profit and build your expenses model around that gross profit target, said Harris. That includes getting bills paid on time.
“Happy customers pay their bills,” he said. “If someone’s not paying, it’s because there’s a problem. The only thing that’s going to get that bill paid is fixing that problem.”