Many business owners get into an industry because they have a passion for their industry, not because they love to monitor business metrics. However, tracking metrics is key to the success of any company.
Documenting essential statistics, profit and loss reports, sales and revenue reports, and marketing reports may seem tedious. However, when you have a record of your company’s performance, you have something with which to compare current operations.
In this article, we will discuss metrics, what is considered “vital,” and how you can keep a finger on the pulse of your business.
Why Track Metrics?
As you consider your company metrics, it’s crucial to fully understand the benefits of keeping track of this information.
Here are five reasons to track metrics and keep records of metrics in your business:
1. Statistical information gives you a sense of where you started and the state of your business today. It also gives you the ability to plan ahead – and see what is realistic and what goals may require a significant shift within your company.
2. You can correlate metrics to get a holistic view of your business. For example, if your company is making more money than ever, but you feel as if there’s never money for anything, metrics can give you the answer to what’s happening. Maybe you just hired fifteen new staff to take on the added workload. Perhaps your bills have spiked due to increased materials orders. Maybe you just paid for ten new workstations. All of this information will give you the answer to the question: “Where’s the company money going?”
3. Statistical reports are your early warning system. If you have kept records of the critical metrics in your company, you can see when things are not operating at their most optimum. This in-the-moment information allows you to respond rapidly to a dip in sales or increased customer service complaints.
4. Metrics provide objective information to point to during collaborations. Having the ability to compare current metrics to past metrics allows you to give your staff something tangible from which they can work. For example, if your marketing team campaigns seem stagnant, you can pull out the reports and compare this latest campaign to one performed six months ago. Are things doing better, worse, or the same? What actions should your marketing team take based on this information?
5. When leadership keeps track of metrics and shares that information with employees, those employees can make performance decisions on the fly. They can even track their individual performance and make smart choices. This allows great employees to do a better job on their own – without management stepping in.
When you keep track of metrics and statistical reports, you save a “memory” of how your business has grown or contracted. This data provides context for decisions made and can help keep you from making the same mistakes twice.
Which Metrics are “Vital?”
There are so many metrics to track when it comes to any business. Many statistics are essential and should be tracked. However, not every statistic is “vital.”
Most businesses consider sales, income, and products/services delivered as their primary, vital metrics. However, many companies have add-on essential metrics that need to be monitored.
For example, a web-based business may count bounce rate and keyword ranking as vital information. If their main keywords drop in ranking, they need to make changes – fast – or they will get fewer sales.
Another example is a hair salon. They may want to keep a close eye on customer churn/customer retention statistics. If their regular customers stop booking appointments, there is a real issue, and something needs to change right away.
So, in the end, you need to decide what is vital for you to track in your business. What are your “have to haves” for your company to remain viable and grow?
At Business Success Consulting Group, we can help you take a comprehensive overview of your business. Contact us today to get a no-cost evaluation.