Scenario: "Dude, we'll just try to make lots of Benjamins. We'll make billions. Yay!" Imagine playing a basketball game without keeping score. Or, imagine taking class tests without knowing your grades. Or even worse, imagine building your business without tracking your cash flow. What happens?
- You start doing potentially foolish things.
- You lose insight on what you should really do next.
- Most importantly: You lack a guideline to improve, improve, improve.
Don't sweat. Here's our solution: Have a Kick-Ass Measuring Stick. [Remember: you can't improve what you cannot measure.]
Who Uses The Kick-Ass Measuring Stick
- Larry King tracks his number of viewers per show.
- Kobe Bryant tracks the number of points he scores per game.
- Jeff Gordon tracks the race time spent per lap.
- Dell tracks the number of defective computers per 1000 sold.
- Google tracks the time spent per user session.
- Apple tracks the number of Apple iPods sold per quarter.
Why do all-world performers use a measuring stick? It:
- Helps them know where they stand.
- Gives them well-defined road maps to improve.
Your Own Kick-Ass Measuring Stick
The formula to track how well you're doing: Measuring Stick = [secret sauce to kick booty] / [lap interval] Here's how you find those missing two variables:
Variable #1: Finding your "Secret Sauce to Kick Booty."
If you want to -- for instance -- increase profits by 500%, ask yourself:
- What's the "secret sauce" to get there? (e.g. # customers, sales cycle time, % referral rates, etc.)
Variable #2: Finding your "Lap Interval."
Once you you have your secret sauce:
- Define a lap interval that will help you kick the most butt (e.g. per month, per shipment, per transaction, per customer, etc.)
Ta-da! Wrap it all together (Kick-Ass Measuring Stick = [secret sauce to kick booty] / [lap interval]), and you have a measuring stick to track your business's performance.
"Give me some demonstration, puh-leease!"
- Hendy's running a web development company.
- He wants to increase profits by 500% this year.
- He asks his badass: "What's the most important ingredient to get me there?"
- Ding! "Increasing: The # of customers!"
- "So, I will track my performance by: The # of customers I snatch every quarter."
Hendy now has a clearly defined road map to track his performance:
- Quarter 1: "I will improve on last quarter by snatching 10 customers this quarter. Woo-hoo!"
- Quarter 2: "Now, if I'm getting 18 customers in Quarter 2, I'm doing really well!"
- Quarter 3: "23 customers! Oh-yeah."
- Quarter 4: "30 customers this quarter!"
Hendy's measuring stick (# customers generated / quarter) helps him see how well he's doing. More importantly, the measuring stick gives him a benchmark to improve every quarter.
"So, should I have multiple measuring sticks?"
Most definitely. The rule of thumb: The more things you can track, the more sexy ways you give yourself to improve your business. You'll find some measuring sticks more important than others, so we'd recommend prioritizing them.
"So, what are other measuring sticks I can have?"
Let your mind run free. Here are some measuring stick inspirations to improve in your business:
- Referrals / Customer
- # Orders / Visit
- Cost / Shipment
- Employee ROI / Week
- Resources Spent / Project
Have fun kicking major booty.
My Kick-Ass Measuring Sticks: ________________________________.
Posted on February 27
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