Measuring What Matters
How do you know if what you’re doing is working? Very often, when something we’re doing doesn’t seem to be working, it actually is, we just haven’t see the results yet. It’s the old "water boils at 212 degrees; at 211 it's just hot" analogy.
But sometimes what we’re doing really isn't working, and it's not going to magically start working if we just do more of it. It's better to sharpen your axe than to keep striking a tree with a dull blade.
Very often, for startup businesses, we need to know whether or not something is working BEFORE we actually see the results. How do we know if what we're doing is working, and we should keep going with it, versus changing tactics, or strategy?
Back to the boiling water analogy – if we’re standing there watching a pot of water on the stove, then, at a minimum, we can observe as the water begins to simmer. We can also hold our hand above the pot to feel the heat.
Those sorts of observations work well enough, but if we really want to know not just IF what we’re doing is working, but HOW WELL it’s working, we need get more granular.
We could use a thermometer to take periodic readings to closely monitor and measure our progress. We could use that more granular approach to project or predict the near future, or when we'll achieve the desired result of hitting the boiling point.
How can that be translated into what brand owners do?
The same way a thermometer measures something very specific, we need to be very specific about what we measure in our businesses, and how/when we measure. It’s not good enough to simply hold your hand over the pot of your business, or worse, wait until the pot begins to simmer. That’s a bit haphazard, and you may never achieve the desired result.
What can and should we measure?
To start - we measure our growth in sales, obviously. But we can also measure changes in our fixed and variable costs. We can measure the growth in our social media following and email newsletter lists. All that is a good start.
From there, we can get even more granular. Let's look at the change in inventory turnover rates, and profit margins, which are key indicators of an improving business.
There’s nothing wrong with supplementing those objective measurements with anecdotal or "seat of the pants" observation (like holding a hand above the pot), such as how much time we spend engaging on social media, how much time we spend "putting out fires", how overworked we feel, and how much fun we're having ( trust me, the better your business runs, the more fun it will be).
Many brand owners turn on the pot and walk away, or give up too soon, or prefer to hold their hand over the pot, rather than go the extra step and use a thermometer. Their results and decisions reflect their willingness to be rigorous and precise in their observations and measurements.
You want to know EXACTLY when your business will hit the boiling point? Get proficient at using the right thermometers, crank the stove up to full heat, and take periodic measurements.