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. 

Key ini­tia­tives:
The key things that must hap­pen to move for­ward in your busi­ness. You may iden­ti­fy them as weak links or con­straints.

Exam­ples:

  1. Open Day­ton office
  2. Imple­ment new HR Plat­form
  3. Trans­fer Admin­is­tra­tion Depart­ment to doc­u­ment imag­ing

Cus­tomers:
Spe­cif­ic goals you need to set around your cus­tomers to reach your sales and Gross Mar­gin goals.

Exam­ples:

  1. Build pipeline through client refer­rals
  2. Cut ties with five unprof­itable D clients
  3. Close three $50,000 + con­tracts

Sales and GM:
The sales and gross mar­gin results can you expect from your cus­tomer growth.

 Exam­ples:

  1. Annu­al rev­enue of $3.5 Mil­lion

Finan­cial results:
Set spe­cif­ic goals around the weak links on your income state­ment.

Exam­ples:

  1. Net income before own­er bonus is 15%
  2. Pro­duc­tion pay­roll at 35% or less

Finan­cial strength:
Set spe­cif­ic goals around the weak links on your bal­ance sheet.

Exam­ples:

  1. 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.

 

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