Weekly Business Idea

July 20, 2018 – What is Critical to My Success?

Posted on | July 20, 2018 | No Comments

Main Idea:

What is driving your business?  What are the things that you need to get right?  What are the pieces that you need to grow?  How do you know if your business is working properly?  What metrics are you looking at?  Are they the right ones?

Expansion of the Idea:

If you are asked to name the top two or three things that are critical to your business success, what would they be?  If you are like most business owners, you would probably say sales, cash flow and people.  You might include marketing, quality control or product mix.  There are a number of other items that might be at the top of your list.  The point is that most leaders will point to a few key things.

Frequently this is where the analysis stops.  If I were to ask you to name the critical steps of generating sales, you might be able to tell me.  However, rarely will a small business owner actually measure the key functions that are necessary to generate the right levels of sales.  Very few small business owners could give a numerical evaluation of the health of their relationships with their team.  Almost no one can tell if their marketing is doing anything positive except depleting their bank account.  We know a lot about our businesses but we tend to leave a lot up to chance.

The obvious question is “What should we measure?”

This question is not easy to answer because each business is a little different.  Even businesses in the same industry are in different seasons.  A start up needs to look at different metrics than a 50 year old company.  And to complicate it further, it might change throughout the year because of the seasonality of the business and the natural business cycle.

To figure out what to measure, it is first necessary to identify CRITICAL SUCCESS FACTORS.  This requires a little soul searching and brainstorming with your team.  At the company wide level this might be number of sales calls or order fulfillment percentages.  In my case, it is directly related to how much time I focus on marketing efforts.  Normally there are specific things that the company needs to get right.  Then you have to cascade it down into departments and employees and determine what they must do for that piece of the company to work right.

Once you figure out what is critical for the company, department and employee to succeed, then you should look for ways to measure it.  This is called KEY PERFORMANCE INDICATORS.  KPI’s can either be lead indicators, which measure activity, or lag indicators which measure results.  Ideally you would have a little of both.

The new manager of the St Louis Cardinals has identified his KPI’s.  One of his most important indicators is number of errors.  The Cardinals have been playing sloppy baseball and he is focused on playing those Cardinals who will be able to improve that KPI.  (Of course, last night, they committed three errors and at least two other mental errors.)  Whether his KPI is right or wrong, he has identified it as what he is focused on.  There is clarity in his communication and in who will be playing baseball every day.  Everyone knows what to expect.  I think they will improve because of it.

This whole process is not easy and can be a little time consuming.  Yet, the benefits are huge.  When you focus on what is critical for the business or at the employee level, everyone knows what is necessary.  It improves communication and focus.  When businesses hit rough spots, everyone knows where they need to focus.  It builds teamwork and will help you achieve your goals.

Questions to Ponder

  1. Do I know what is critical to our success?
  2. Does my team know what is critical?
  3. What are we measuring?
  4. Are the KPI’s properly identified and measured?

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  • About

    These weekly ideas are brought to you by FitzGerald & FitzGerald P.C. For more information about how to use these ideas with your small business contact Tim FitzGerald at trfitz@fitz-net.com.