“For me, goals and daily metrics are the key to keeping me focused. If I don’t have access to the right stats, every day, it is so easy for me to move on mentally to the next thing. But if I have quick access to key metrics every day, my creativity stays within certain bounds–my ideas all center on how to achieve our goals.” Paul Allen

My last series has led to a couple of interesting questions regarding what metrics a business owner should  follow closely to keep an eye on how well or badly the business is performing. Without access to these important facts and figures on a regular basis, the business owner tends to lose sight of the end goal and gets caught up in the daily grind of running the business. Unfortunately this leads to situations which the business may not be prepared for and can severely cripple business growth. Metrics are key tools to help give the entire team a dashboard view of how well the business is doing in comparison to the what they set out to do. Metrics can be split up into two segments, financial and non-financial. Focusing solely on just one of them will create several blind spots for the business owner.

When looking at a business, several key metrics come to mind, such as revenue, profitability, growth, customer acquisition and even customer satisfaction. Each one of these tell a story of how the business is performing in various segments. The important aspect of evaluating metrics is paying attention to the right ones. Depending on the structure of your business and the industry you are in, certain metrics will have greater weightage as compared to others. For example if you run a restaurant, customer satisfaction, table turnaround time and margins are critical metrics which need to be looked at on a regular basis. It is when we become distracted or complacent about the current situation that problems begin the creep up.

In light of this I have decided to do a two part series. The first part is going to be focused on financial metrics for businesses. I am going to select five key financial metrics which I believe are critical to most organizations. The next part of the series will be based on five key non-financial metrics that every business owner should keep a keen eye on. Systems need to be put into place to tabulate these metrics and processes outlined to make sure that they are reviewed on a regular basis. This will help business owners to see just how “well” they are actually doing. In some cases the metrics will not be directly applicable to your business model. I will be more than happy to advise business owners about varied business models in metrics that they should be evaluating for their models.