Numbers.
Crucial for the success of any organization but overlooked because lets be honest, tracking numbers isn’t fun. Whether you are a soloprenuer or you have a staff of 20, it is crucial to have a firm grasp on your numbers. Understanding key metrics and activities not only propels a business forward but also fosters clarity for employees and empowers owners to make better decisions.
The Importance of Knowing Your Numbers-Why does it matter?
1. Informed Decision-Making
Numbers don’t lie. They provide an objective basis for decision-making, eliminating guesswork and reducing the risk of costly errors. By regularly reviewing financial statements, sales reports, and other key metrics, business owners can identify trends, pinpoint areas of concern, and capitalize on opportunities. This data-driven approach ensures that decisions are grounded in reality, not assumptions.
2. Setting Clear Goals and Benchmarks
Understanding your numbers allows you to set realistic, achievable goals. Whether it’s increasing revenue, improving profit margins, increasing productivity, or reducing operational costs, having clear benchmarks helps you track progress and stay focused. These goals provide direction and motivation for both you and your team, fostering a culture of accountability and continuous improvement.
3. Enhancing Employee Clarity and Engagement
When employees understand the metrics that drive the business, they can see how their roles contribute to overall success. This clarity boosts engagement, as team members feel more connected to the company’s mission and objectives. Regularly sharing key performance indicators (KPIs) with your staff can also foster a sense of ownership and encourage proactive problem-solving.
There are so many numbers you could track, but it is important to know which numbers you should track for the success of your organization.
If you aren’t tracking any numbers, here is where you start:
- Choose metrics that align with your specific business and industry.
- Establish a baseline for each metric. You can’t decide what the goal should be if you don’t have the baseline. You can’t progress from where you are unless you have a starting point.
- Establish a way to track those metrics as well as who is responsible for tracking the metric. This can be a simple google sheet that key people have access to. Decide if the metric should be tracked daily or weekly, and where the source is being pulled from. If it is daily, decide when the metric needs to be put in (end of the day vs the beginning of the day for the previous day).
- Once you have a baseline, set goals for each metric that are realistic for the role and attainable. No one wants to have goals they consistently can’t reach.
- Decide on a rhythm to view those metrics. The metrics tell a story. Take time to look at the data coming in to make improvements.
If you haven’t established metrics in your business, start with 3. Figure out 3 metrics that are so important in your business, that if you started measuring them today, you’d be able to see if the activity is moving the organization forward.
If you want a more in depth look at creating metrics, email me and I’ll send you my Metrics that Matter: Crafting Effective KPIs for Your Small Business pdf.
If you find you are feeling overwhelmed in your role as a leader or business owner, and need to gain clarity and a path forward, scheduling a First Steps Consultation may be your next best step. Sign up here.
Stephanie German is a business strategist, adjunct professor, and speaker. She holds a master’s degree in organizational leadership and loves giving back to her community in a variety of ways. When she’s not coaching clients or writing about leadership, Stephanie is usually headed to the mountains or the beach with her family, drinking savory wine, or working on the latest project with her husband. Stephanie’s greatest desires are to raise up the next generation of leaders while raising her own children to be strong, independent, and brave. She lives in Fresno, California with her husband Blake and her three spunky daughters, Cara, Kinsey, and Peyton. She is the best-selling author of So Your Boss Can’t Lead?