There’s an old management saying that is relevant this time of year, and it goes, “You can’t manage what you don’t measure.” It’s so timely right now because this is when you should be reviewing the year that passed and planning for the new year ahead. Incorporating measurement as part of your management starts by keeping track of metrics and data points that are important to your business. Some of those metrics might be how many new leads you accumulated over the year, how many new appointments you made as a result, how many you converted to clients, and what that translated into from a new revenue standpoint. Just those very simple and basic metrics can tell you what your closing ratio was and how much revenue your average close is worth. From there, you should analyze your marketing expenditures to understand where those new prospects and clients came from. Now you’ll be able to understand what sources provided your best marketing ROI. By knowing how many leads you had, where they came from, and how many you closed, you can start applying that data to create a strategy. Let’s say you want to grow by 50% next year; You’ll be able to better understand the number of new prospects you need to be in front of based on your closing ratio.
In reality, you should be measuring a lot of business metrics on a regular basis, not just at the end of the year. Start by making sure you have a list of key performance indicators that are important drivers of your business. It’s important to make sure you focus on much more than just revenue metrics. Too many business owners place most of their focus on the revenue line, but that’s really the outcome of everything you did to get there. Instead, look beyond the obvious and study the cause and effect that produced the outcome. Success leaves clues, so examine the “why” and “how” of what worked so you can better understand how to repeat that success in a larger way. You should also dedicate some time to evaluate those initiatives that didn’t work so you can truly understand why they didn’t, and if the outcome would have changed with a different strategy. This will put you in a great position to positively influence your bottom line moving forward.
One of the often-overlooked areas as a growth driver is also one of your most important assets… your team. We like to use a SWOT analysis as a tool to get unfiltered feedback from inside an organization. For those unfamiliar with SWOT, it stands for Strengths, Weaknesses, Opportunities, and Threats. It might be an old-school approach, but it never ceases to provide valuable information that ownership may not be aware of. It has resulted in everything from creating new processes that have enhanced organizational efficiency to strategic breakthroughs that resulted in significant revenue growth. Performing a SWOT analysis isn’t difficult and if you would like to utilize our form or learn more, click here.
So remember, to continue moving your company forward in the new year, take the time to measure and better understand your key performance metrics. For the best outcomes, make sure to include your team in the process.