Over the last five weeks, I introduced my Ebook 12 Steps to Business Transformation and I defined the first 5 of the 12 transformational steps. This week we are going to talk about Measure, Monitor and Analyze.
Measure, Monitor and Analyze is step 6 in my new Ebook “12 Steps to Business Transformation.”
Measure, Monitor and Analyze requires you to document and understand the key business metrics of your business. These metrics are health indicators for your business.
For example, revenue generated per square foot may be an important indicator for your business if you are in retail or in the restaurant business. If the revenue number per square foot slips too low, your business may be in jeopardy. Similarly, your overhead multiplier (multiplier applied to an employee’s base salary to determine actual cost) may be important to an engineering company. If this number gets too high, you will price your services out of the marketplace!
By measuring the key business metrics, monitoring them constantly and analyzing the results, the business owner is better able to understand how the business is operating and what changes may be necessary in the business to better achieve the mission and vision.
It is kind of like being a pilot of a plane – you need the most important metrics of your plane visible to you at all times while you are flying (speed, altitude, location, etc.). Without these metrics you are “flying blind” and the plane will be very difficult, if not impossible, to fly. Similarly, without proper identification of the key business metrics and the monitoring of these metrics, your business will be next to impossible to run effectively.