In control? What are your numbers?

photo by sean rogers1

You have to love the clarity and power of numbers.

Now that school’s started up again, homework is ramping up as well and my wife and I had a great ‘tutoring’ session with my daughter on her math homework.  My daughter was struggling with one of the concepts and wanted to argue that the answer we had led her to wasn’t right….

But that’s the beauty of math and numbers…they are either right or they’re not.  You may be asking the wrong question, but when the answer is in numbers, it’s very clear where you stand.  43 is bigger than 35 – and it’s always going to be bigger.

That’s why when you’re analyzing your business and your goals, the more things you can tie to a number, the better off you’ll be.

There’s no ambiguity in numbers, no gray area…no where to hide.  As long as there’s understanding and agreement on where the number comes from, the numbers for your business will be the clearest information you can get.

Everyone needs a number

There’s a great story that’s in Dale Carnegie’s classic book “How to Win Friends and Influence People” about Charles Schwab when he was the president of Bethlehem Steel in the early 1900s.

Charles Schwab was touring a mill and the manager of the mill was frustrated with the lack of productivity.  Schwab took a piece of chalk, turned to the day crew foreman and asked them how many heats they had completed that day.

“Six” was the answer – so without another word, Schwab took the chalk and wrote a large number 6 on the floor of the mill and walked away.

As the night shift came on a little later – they noticed the big number 6 and asked what it meant.  The day shift team told them the President of the company had been there, asked how many heats they completed and had written down 6.

When the day shift showed up the next day, the 6 had been rubbed out and replaced with a large 7!  Not willing to fall behind, the day shift focused, worked together enthusiastically and by the end of the shift they inscribed a huge ‘10’ on the floor.

The end result?  That mill, which had been underperforming soon became the most productive mill in the company.

By making the mill productivity simple, clear and to the point, it was easy to set a target and get instant feedback.  That’s the beauty of numbers.

What are your numbers?

If you’re in a manufacturing industry, then number of widgets produced is an obvious choice (although number sold might be more effective if your ultimate concern is profitability).

In service industries they often track billable hours, from a quality perspective you might look at number of returns or customer complaints.  Bottom line, there are a handful of numbers in your business which really give you a feel for how well you’re doing overall – especially looking at them over time.

Let’s say production is at 110/day – flat relative to the last 3 months, Revenue is at $5000/day down steadily from $8000/day 3 months ago and new leads from the website are at 5/day, down from 50 / day just a few months ago.  Just based on those numbers, it looks like you’ve got a marketing problem!  There may be other issues as well, but you can at least start there.

It’s not easy to find your numbers – it will involve some trial and error and they may change as you and your business mature.  Here are some tips to help you come up with what you need to drive your business:

  • Keep it simple – if you have to go through a lot of work to get to the number, it won’t work in the long run.
  • Keep it visible – ideally your numbers should be something that people can easily see.  You could even consider creating a report or dashboard that’s visible at all times.
  • Narrow it down to just the critical numbers for operational success.  For starters, see if you can limit it to less than 10 for the entire business.  You may want to track other things as part of strategic planning and evaluation, but for more tactical management of the processes – keep it to a small number.

What do you measure in your business?  How often do you look at it?  If you were on vacation and only got a one page report of your numbers, would you know what’s going on?  Share your thoughts below in the comments below – I’d love to hear how this works for you?

Shawn Kinkade  Kansas City Business Coach

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