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
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.
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.
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.