Taking GIANT Steps (2 of 4) -
Add Measurement Devices to Your Business

Most small business owners I know are very busy people. They get up early, work all day, come home late, and in their “off” hours, they are still thinking about work. They are “doing it, doing it, doing it, doing it, doing it, doing it, doing it” until they drop. And then they do some more.

It seems to be a fragile, delicate, balance between “making it” and “failing.” 

And often, they aren’t sure which side of the “success fence” they are on. At the end of the day, are they “winning or losing?” Most of the time, they aren’t sure.

Imagine yourself going bowling, but with a little “twist.” You go to the bowling alley, you still roll balls at the pins, you knock some down, you throw some gutter balls. The difference is that there is a curtain halfway down the alley. The ball disappears and so you don’t see it hit anything. A few weeks later, the bowling association mails you your score. 

First of all, this isn’t much fun! And second, you don’t know where to start to improve your game. Do you really want to go back and bowl some more? 

Many business owners are “bowling blind.” As a small business owner, you should KNOW how you are doing, by measuring your business each and every week. 

What are the critical factors for your business? While each business is different, here is a brief list of some of the measurable factors: sales, inventory, phone calls, presentations, assessments, consultations, foot traffic (for a retail business), table turns (for a restaurant), installations, bank account balance, labor percentage, inventory re-ordered, percentage of items ordered when customers order from a catalogue. 

In our business, we measure 17 different factors each and every week. While they are all interesting, here are the ones I believe are most critical:

1. How many new inquiry calls are we getting each week? No matter how many clients you have, that population is always shrinking. Clients finish, or just quit, or move, or get sick. Unless we are constantly getting new clients, our days in business are numbered. And so we count how many new people call us. We don’t have lengthy conversations with all of them, and of course all don’t become clients. But if the phone is ringing, it means that we will get new clients.
   
   
2. How many client hours were worked each week? This is not about how many were scheduled, but rather, how many client hours were actually held. At each stage of growth, there is a “norm” that you reach. I know that if client hours go within certain ranges we had better not spend any extra money. When hours go way up, we don’t panic when we see larger payrolls or other expenses. It helps us judge whether we are making the best of our capacity.
   
   
3. How many non-client hours did we pay out each week? A non-client hour is any hour that we paid someone to do work that was not teaching a client. When a clinician works with a student, the clinician is being paid by the fee that student is paying. 
   
   I never worry about a larger payroll when it is for client hours (teaching hours). As soon as there are people working but not directly with students, you can “lose your shirt” in a hurry if you are not careful. It doesn’t mean that you won’t have any. You have to have some non-client hours or you will DIE trying to do everything yourself! Just know what the tolerable number is for your business.
   
   
4. The bank balance. That is easy enough. Pick one day each week and write down what your bank balance is.

Develop a report – Once you decide which factors you want to measure, you begin collecting those numbers and write them on a form each and every week. I like a week because a month is way too long to go without some indication of your standing. I don’t panic after bad number one week, but I definitely pay attention to the next week. 

After just a few weeks you will start to get a feel for your numbers. You can glance at them and know if things are on track or if you should be concerned. 

When you see a number that has made a radical change, go find out why. Bank balance suddenly huge? Look for what caused that. Inquiry calls suddenly down? Maybe it is time to start a marketing effort.

Does this mean that we never have crisis points in our business? Not at all! But now we can at least see them coming.

Getting Advanced — After a short while (2 to 3 months), you can start using your weekly reports to help you project the future of your business. 

Are you thinking about moving to a larger facility? Look at your numbers and see if you can afford it.

Want to make a change in your business? Your numbers will tell you if the change is occurring, if you can afford something, or if there is something sneaking into your business that is hurting or helping.

A caution about “numbers” — Remember that numbers NEVER tell the whole story. They just give you one form of concrete measurement.

Keep your reports! Save them in a binder or a folder. When numbers change radically, we start looking back to previous years to see if it is a yearly trend. For us, September is not a great month. And with the holidays, December is always a low month. 

Your reports will be very valuable in the years ahead as you grow your business. Just remember,