Measuring Your Business Made Simple – No Geek-Speak, Just Results!

Unfortunately, measuring usually means numbers,
and just the thought of  numbers can make some people run away in horror!
Here are some great tips to make measuring really easy, without the geek-speak, (or the fear)!

The purpose of measuring is to:
* confirm you are on the right track (per your mission statement, strat plan etc)
OR
* to alert you to keep or change something.

WARNING: Measurements or results that don’t help with decision making are likely to be “vanity metrics”.  If you have numbers there to make you feel good, but without any business decision making value; they will be a distraction.

Over the years, countless people have told me, “I’m bad at math, so I don’t measure, read reports, or understand my costs.” Let me be clear: this is false. While they may not intend to lie, very few business owners are truly incapable of basic math. They’re usually smart, and our education systems cover the basics.

So, when someone says they’re bad at math, it’s likely because:

• They had bad teachers,
• They didn’t find it interesting, or
• Both!

I’ve personally helped hundreds of clients who said they couldn’t do math, and every single one improved their skills, embraced metrics, and boosted their business success!

Don’t be intimidated by the word “metrics” – it’s just a fancy term for a set of numbers about the same thing, measured in the same way. Think of it like when a tailor takes your measurements for a suit: chest, waist, hips, leg length – those are your personal metrics, whether in inches or centimeters. Simple, right? Measuring doesn’t have to be complicated; in fact, the simpler, the better!

Here are three rules of thumb to easily create good measurements that will provide useful metrics – (remember metrics are the results of taking standardised measurements)

Rule 1. Use a Rate or ratio – these are better than an absolute or cumulative value. “number sold” is not nearly as useful as “% of total sales” – for example “we sold 5 blue ones” doesn’t provide as much information as “60% of Sales were blue”.

Rule 2. Use Comparatives – compare the numbers across time periods, sites, or segments will give a better picture than a stand-alone number. “% of total sales” is not nearly as useful as ”% of total sales per week” OR “% of total sales per shop per week”. The key here is where you track a metric over different groups (in this example shops) over periods of time.  Keep it consistent, if you set your metric as weekly track and save the data weekly so you can report the metric properly.

Rule 3. Keep it Simple – clear and easy to understand; otherwise, people won’t remember it and discuss it.  Check if the metric name is less than 5 words and the calculation is easily described in under 10 words.

For more information see this excellent post by McKinsey & Company https://www.mckinsey.com/industries/social-sector/our-insights/measuring-what-matters-in-nonprofits