Have you ever watched a sporting event and completely ignored the score until it was over? Do coaches wait until after the game ends to give feedback? Do baseball players ignore the count (balls and strikes) when they are up to bat? No!
So why do businesses fail to keep score in the middle of their season? Why do entrepreneurs wait until the year ends to determine if they are even still in the game? Do you ignore the points on the board until the buzzer sounds? Why not create a business scoreboard to know your status at a glance?
Use 5 Key Metrics To Easily Keep Score of Your Busines Performance During The Year
When you attend a game, or watch one on TV, the scoreboard is easy to see and easy to understand. The other team is up by 5 points, your team is first and goal, or your team has a power play. You don’t think twice about the depth of information you are getting at a glance.
Your business scoreboard should serve the same function and have the same visibility. It should have no more than 5 key metrics. The metrics should be easy to understand, and should be displayed in a place where you will see them every day.
At the end of each month review your performance against goal. Think of your goals as the competition. The scoreboard tells you if your business is winning or losing. Reviewing monthly is often enough to allow for course correction, but not so often you get distracted from running your business.
Small Business Key Metric #1 – Total Monthly Revenues
Think this is a bit obvious? Can you (without looking) tell me what your target revenues were for last month and your actual revenues for the same period?
Obvious doesn’t mean useless. Big signs that say “Bridge Out” are obvious, but I’m sure glad they exist.
It’s crucial to look at actual money coming in the door. A bill or invoice is not a check in the bank.
Small Business Key Metric #2 – Total Monthly Expenses
You may be tempted to snort and say, “Did she just graduate? Of course I need to look at my expenses.” Great, what were they last month? What were they supposed to be? I see countless entrepreneurs ignore this number, and consequently they fail to meet their profit goals.
Even if you have the highest scoring game of your life, if the other team scores even more points you lose. In business, even if your revenues are through the roof, if your expenses are higher you will lose money.
Be sure your monthly review counts all expenses paid.
Small Business Key Metric #3 – New Clients
Can you imagine if a professional basketball team said they were going to skip the draft this year? Or if baseball teams stopped talking to players that just became free agents? Teams that fail to bring on new players will fall behind their peers. As their roster ages or gets injured the pool shrinks and so will their performance.
Every business needs to be bringing in new clients. However it is easy to lose sight of this until all your players have bad knees and grandchildren. Remember even clients that start small can be nurtured to bigger contracts.
Small Business Key Metric #4 – Repeat Clients
While new blood is great, can you imagine a team being successful if every player was new? There would be no cohesion, no shared experiences, and no foundation. In other words, bedlam!
Repeat clients provide a foundation on which to build your business. Not only is it easier to sell to an existing client, it costs less money. These are things that add to your bottom line.
Yet many entrepreneurs fail to appreciate their current customer base, and worse they fail to show their appreciation. Making this a key metric keeps you focused on retaining and nurturing the very people who helped you achieve your current success.
Small Business Key Metric #5 – Wildcard
Shots on goal would be a useless statistic if you were watching a football game. Nobody sacks the power forward in basketball (if they did they get thrown out of the game, not cheered).
All businesses are not created equal. Some sell services, others widgets. Some sell to consumers, others to corporations or even governments!
Consider what is one other activity or metric that is crucial to your continued success. Be sure it is something measurable and objective. Add that as your final business scoreboard statistic.
Do you have a business scoreboard? What’s on it? Will you make one now? What is your wildcard metric?
Scoreboard Photo via Shutterstock