What’s Driving Your Business
As a business owner, you are normally concerned about many different things during the average day. For a lot of us it includes both operational and strategic concerns. What if you’re just playing the role of the business owner and not the operator? What if we are strictly not allowed to visit our office premises? What are the things you need to know on a daily basis so that you know you’re business is on course to reach your targets? What factors drive the success of your business?
Well, whether you’re just an owner or you’re an owner operator, you need to know these ‘Critical Drivers’ for your business. Depending on the nature of your business, you will want a daily or weekly report of your critical drivers. These drivers can be different for each business owner – basically you’re looking for guidelines to help you determine how successful your daily performances are in relation to your business goals.
For example, a restaurant owner may want to know how many visitors dine at their restaurant each day, what was the average amount per check and how many high margin items were sold. If you have these numbers everyday and you compare it against your weekly and monthly averages, you will have a very accurate way to measure your performance each day and when performance drops, you can ask your team the important question: ” What are you going to do today to make up for yesterday?”
Some tips for setting up critical drivers for your business:
1. What can be in my critical drivers list? Basically the most important things that will help contribute to the success of your business: how you get customers, how you retain customers and how you manage your cash. Consider the number of prospects you’re generating,your conversion rate(s), the average dollar sale, the average number of transactions per customer, your average margins, your efficiency, etc.
2. Pick 5-7 critical drivers to be measured and reviewed regularly. Any more than that and it will be hard to focus.
3. Make sure you discuss and review this with your team as often as they are produced (for example everyday if you’re getting a daily report). They should be short discussions unless your team is in trouble.
4. Analyze the trends. When you’ve collected a sizable amount of data, your analysis will be a lot more powerful. You will now be able to make effective business decisions based on your data rather than gut feeling. To quote Keith Cunningham, gut stands for ‘Gave Up Thinking’!
Enjoy the application of this knowledge in your life and business!
– Marvin Suwarso –
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