Posted by: Jeri Denniston | October 5, 2008

Quantify Your Business

Once you’ve developed the vision, mission and values for your business, you need to measure it. Walking around and talking to your staff is good, but it’s not enough. According to Michael Gerber in his book, E-Myth Mastery, by creating an effective quantification process, you can pinpoint what’s happening in your business and anticipate when problems might occur that need to be corrected. This results in an agile business, able to adapt to change quickly. Just make sure you’re quantifying relevant information that affects the growth and sustainability of your business.

There are three levels of key indicators that need to be addressed, according to Gerber:

Strategic which show how the business is progressing towards achieving that future vision.

Business which enable you as the CEO and your senior staff to view the business and its major divisions or departments as an integrated whole, and

System which show managers and staff at all levels, in detail, what is right or wrong with each system within the organization.

Key Strategic Indicators
These indicators give you a sense of the overall morale and health of the organization. They are high level indicators which tell you whether or not you’re still on the right path towards your desired outcomes. At the strategic level, these may include employee satisfaction, customer satisfaction, market positioning vs. your competition, and profitability vs. revenue.

Key Business Indicators
These tell you how well each system is working together. Remember, a business is a set of systems within an overall system (the business). There’s the IT System, the Marketing System, the HR System, etc. Even if you’re a small business with fewer than five people, you can divide your business into systems. You need to be looking at how well integrated these systems and processes are, how well they work together, not just at the individual parts of the business. Some indicators will be financial, some will be around customer service or product marketing, sales or lead generation, and some may focus on technology, production or manufacturing.

Key System Indicators
monthly-change-in-key-indicatorsHere’s where you get into the detail of each system and measure and track what’s working well and what isn’t. Identify the key indicators in each system that make it successful and a plan for each to achieve that level of success.

Set up a process to gather the information and report it on a monthly and quarterly basis. This keeps you focused on the whole business and its integrated parts. We recommend simple tools that result in one-page reports. They don’t need to be lengthy, but the reports do need to be relevant.

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