We’ve all seen the headlines on business failures. One look at the recovery estimates from McKinsey for the hospitality, transportation and education industries gives me the shudders.
We all know business owners who have started businesses that were barely paying the owners a living wage before COVID. The average small business owner makes $71,813 per year. “In one study, 82% of businesses that failed cited a lack of cash flow as a factor in their demise.” (8 Small Business Revenue Statistics, Nina Godlewski, December 31, 2019) Yikes!
What separates those kinds of businesses from the ones that generate revenue, make healthy profits and allow the owner to prosper – no matter what is going in the world?
Really, really good dashboards with meaningful metrics are critical differentiators.
Well, the proper interpretation of those metrics. As a result of the pandemic, racial reckoning, and economic uncertainty, my clients are taking another look at their metrics. We also look at KPIs to determine relevance as well as the messages that each holds.
During this year, I’ve talked with companies without budgets, without business continuity plans, or the financial reporting that would allow a reduction in tail spend. (See Paul Zalesky’s article for the National Center for the Middle Market, “How To Tame Tail Spend”)
I’m calling for a worldwide pause to read your company’s metrics. Look at the data for things like:
- Activation – the when & how of the buy
- Retention – the repeat buy?
- Revenue – cash is king, look at the burn rate
Why are metrics important? What are founders supposed to get from metrics?
- Each metric relates to core operations (looking for excellence here)
- Each metric indicates what’s working, and what isn’t working in the business (Hello, Pivot!)
- Identify your most important metric – the driver of your company’ s growth
It’s best to be very specific with your metrics, to drive towards your goals. KPI’s are a great way to build in accountability for you and your team.
Tune in to the metrics on your dashboard to steer clear of pitfalls and pivot to leverage your industry’s opportunities (even in the midst of the chaos of today’s world).
If you, or your clients, find that scenario planning is always at the bottom of your priority list, make 2020 the year you put it at the top of the list. On Tuesday, October 20th at 3 pm Eastern I’m offering a free webinar, “Eyes On The Horizon, Feet On The Ground”. We use the lens of climate events to discuss the process you and your team can use to get ready for any kind of climate event. The process can be adapted and customized to apply to economic turbulence, loss of key personnel, war, as well as pandemics (seriously).