You guessed it; I am going to talk about data. I’ll keep it short and sweet and address these three areas — Why data mat­ters. What kind of data do you need? How to get your team started.

Why does data matter?

Data mat­ters because it gives you and your team:

1. A com­mon language

Data is a com­mon lan­guage that is easy to under­stand and sim­ple to learn. Make a graph of your data, and it becomes a pic­ture. A pic­ture is a fast and effi­cient way to focus your team’s atten­tion on what real­ly mat­ters in your business.

2. A com­mon purpose

The best mea­sures are devel­oped by con­sen­sus. Invite your team to help devel­op the com­pa­ny goals, and have input into how to mea­sure progress toward those goals. Team involve­ment builds enthu­si­asm and engage­ment. Your team now knows how to win. They are fired up and ready to tack­le your biggest challenges.

3. Fast prob­lem solving

It is much eas­i­er to get back on track when you are 2–5% off goal than down 50%. The right data mea­sured on the right cadence lets you quick­ly iden­ti­fy where things are off track. Your team can quick­ly course cor­rect and right the ship.

What kind of data do you need?

Your team needs 3 kinds of data to win. – His­tor­i­cal, Fore­cast­ed, and Activ­i­ty data

1. His­tor­i­cal

Most of this data will come from your account­ing sys­tem. Rhyth­mi­cal­ly look­ing at your past or his­tor­i­cal data is an essen­tial busi­ness process. To craft a path for­ward, you must know where you are now. Accu­rate and time­ly account­ing data is essen­tial. Oth­er­wise, you’ll frus­trate your team. Instead of solv­ing prob­lems, they’ll dis­cuss why the data is incor­rect. What if you don’t know how good your account­ing data is? Use the Finan­cial Fac­tors Score­card at MackeyAdvisors.com to access your sys­tems’ strengths and weaknesses.

2. Fore­cast­ed

The past is what it is. Only the future is change­able. Many peo­ple fail to mea­sure the future because it is uncer­tain. But once you start pre­dict­ing your future, with key met­rics like rev­enue and net income, over time, you’ll get bet­ter. As you get bet­ter, you’ll know more and begin to course-cor­rect before you even get off track. This is how you dri­ve your car. Look­ing for­ward. The same is true for your business.

3. Activ­i­ty

Finan­cial results are a reflec­tion in dol­lars of your past actions. So why not mea­sure the actions that pre­cede the data? Activ­i­ty mea­sur­ing is a bit of tri­al and error. So patience is need­ed. It’s just like tree plant­i­ng – when is the best time to plant a tree? – 20 years ago — and the next best time – today. So, start today. Mea­sure the key activ­i­ties you think dri­ve your results. Assess as you mea­sure. If you at first don’t suc­ceed, try out new ideas. Bet­ter to begin with just 1 mea­sure at a time, but if you can’t nar­row your list that far, make it no more than 3.

How do you get started?

Down­load a copy of The Pros­per­i­ty Play­book, then skip to page 203, where you will find step-by-step instruc­tions on how to devel­op 5 basic his­tor­i­cal charts. This will get you and your team engaged and edu­cat­ed about your cur­rent busi­ness results. Most teams take about 90 days of review­ing key data before it becomes sec­ond nature. Just like any new skill, be patient, and the pay­off will come. Once you and the team are clear on your his­tor­i­cal data, move on to fore­cast­ing and activ­i­ty mea­sures. You’ll find these resources in The Pros­per­i­ty Play­book also.

Keep pros­per­ing,

Mack­ey