A key element in planning and understanding your business is measurement. Tracking stats is as important in business as it is on the playing field. Each month as a business owner, you get the Income Statement which is the scoreboard of profitability. Helping your team understand how their actions impact the score requires analysis, measurement and communication.
Most likely, as the founder of your business you have a gut sense of what works and what doesn’t. Take that gut feel, and try to put it into actual measurement. Track over time the details that are important to achieving a winning outcome.
In today’s game of business, you can’t afford to make a mistake on understanding what is driving profitability. Identify a couple of measurements and then calculate them, historically, if possible. track trends and how different tactics affect these trends.
Here are some important measurements that could be a part of a company’s regular reporting process. Some may apply to your business:
- Conversion Rate of Quotes to Sales
- Production per Hour
- Gross Profit by Product
- Average Value of Sales Transaction
- Revenue per Employee
- New Customers added per Month
- Inventory Turnover
- Units Produced per Month by Product
- Days Sales in Accounts Receivable
- On Time Delivery Rate
- Quality (Defects per Quantity Produced)
Each business is unique, and it is important to take time to identify key measurements that drive your business and help you to improve the score.