Money Isn't the Only Metric

Posted by: Today's Tip Contributor on September 13, 2010

The deal didn’t close. The numbers were down. The last few months have been really slow. What does it mean?

Most small business owners use financial results to gauge their performance, and when financial results are disappointing, they get down on themselves. They look at their pile of bills, and they subconsciously think: "I can’t do this."

Self-doubt and worry destroy productivity. So you need to keep focused and action-oriented even when nothing seems to be going your way. You need performance criteria that include financial results (good and bad) and also offer you longer-term, bigger-picture perspective on your business.

I suggest defining performance metrics for yourself that meet three characteristics. 1. They are explicit and meaningful. 2. Other people know them, too. 3. There are no more than three or four criteria. Below are some ideas for how you can define your performance beyond your financial results.

1. Use a "pipeline" metric in addition to revenue numbers. In other words, a bad month or even a bad quarter revenue-wise could be a temporary dip. You keep perspective on this only if you know how healthy your pipeline is and have an organized way to see how many new leads are coming in regularly.

2. Measure customer/client satisfaction routinely. You want to remind yourself constantly why you do what you do and use this to measure your overall performance. It really doesn’t matter if you use an evaluation form or ask for testimonials; the point is to measure your impact on an ongoing basis.

3. Evaluate one core skill. Since you don’t have someone looking over your shoulder and you do way too many different things to have a "job"—the easiest thing to do is to measure a core skill you want to develop. For example, if you are working on your sales skills, come up with a way to know you’re improving at selling. Is it more calls? More meetings? Higher conversion?

Above are just some suggestions and food for thought. The important thing is that you decide for yourself what are some important nonfinancial measures to keep your eye on the horizon and your hand steady on the wheel, no matter how rocky the road becomes.

Michael H. Felberbaum
Founder
NumeSpot
Hamden, Conn.

Reader Comments

Harry Vaishnav

September 17, 2010 6:51 PM

Michael

Excellent suggestion. Many small business owners just focus on the end result in terms of financial numbers; rather than looking at the cause. It's really the metrics related cause where you are likely to find solution to your problems. I wrote a similar article on my blog a while ago where I argued about looking at key metrics on a daily, weekly and monthly basis. You can find it here - http://www.angelbusinessadvisors.com/blog/2010/07/reports-you-should-use-to-assess-business-performance/

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