As business owners and managers, we are always searching for ways to improve our business. But too often, we spend an enormous amount of time putting out the fire of the day or hour and not focusing on what matters. All of our knee-jerk reactions to the things we don’t want in our business end up causing more fires. And then, we lay in bed at night thinking about the many challenges we face. If you are a business owner or manager you know what I’m talking about…payroll, cash on hand, employee turnover, building the pipeline…the list goes on and on.
So, the question is: How can we work ON our business when we are so busy working IN our business? Well, it takes effort. It takes focus. It takes clarity.
A good place to start is with your vision. Why are you here in the first place? Are you making a widget just to make a widget? Likely not. So, take some time to dig deep and define your vision. When you know why you are in business it helps you identify what you need to do and how you’re going to get the results you want.
Once you establish or reconnect with your vision you are ready to sit down with a small group of 4 to 6 key people in your business to strategically set goals on a company-wide level. The Prosperity, INC Cascading Metrics Tool serves to guide your team through this process.
If you take a look at the tool, you will see five key areas across the company-wide level: 1) Key Initiatives, 2) Customers, 3) Sales and Gross Margin, 4) Financial Results and 5) Financial Strength. In each area you will set 1 to 3 specific goals you would like to accomplish in a rolling 12 months time frame.
If you are like me you have worked on a project before and ended up with some unexpected and unwelcomed results. Keep this in mind when you are setting your goals: the five key areas are interdependent and not setting goals in one or more of the areas could lead to unintended consequences!
Below are definitions and examples of each area. The examples may or may not apply to your specific business but I have included them to give you an idea of how this works.
The key things that must happen to move forward in your business. You may identify them as weak links or constraints.
- Open Dayton office
- Implement new HR Platform
- Transfer Administration Department to document imaging
Specific goals you need to set around your customers to reach your sales and Gross Margin goals.
- Build pipeline through client referrals
- Cut ties with five unprofitable D clients
- Close three $50,000 + contracts
Sales and GM:
The sales and gross margin results can you expect from your customer growth.
- Annual revenue of $3.5 Million
Set specific goals around the weak links on your income statement.
- Net income before owner bonus is 15%
- Production payroll at 35% or less
Set specific goals around the weak links on your balance sheet.
- Working capital at 1.25 Million
At this point, you may be thinking to yourself, “why only 1 to 3 goals in each area?” Good question. The truth is, research shows that if a team sets out to accomplish 1 to 3 goals it will likely achieve 1 to 3 goals. However, if a team sets 4 ‑6 goals it will likely achieve 2 goals and if a team sets 10 or more goals it will likely achieve none of the goals.
If you are interested to learn more about the science behind this and how you can implement Cascading Metrics into your business feel free to join us on June 5 at our Stop Wishing, Start Creating workshop where Mackey will walk you through a case study of implementing 5 key metrics in her business.