As a little more background, this issue of key metrics for each specific business is so important that it is a major issue covered in week one of the Goldman Sachs 10,000 Small Business Growth Initiative, for which I am a volunteer.
Back to your comments to me and why I am following up the email. Some of you asked me to suggest a few of the metrics that can be or should be part of a favored short list of what to track and why. Others also suggested that sometimes it is safer when someone else helps or suggest the priorities for the top level of 5 to 7 metrics, or how to get to that short a list.
I still remember the discussion with the director of a middle market company who told me how proud their risk management function was of identifying 82 crucial issues. My comment was to ask if a list of 5 to 7 would not be much more manageable and addressable.
Been there and done that enough to know sometimes you want to save your political capital for events which really matter.
As requested, something like the list below is what often shows up when I help a client wade through too long a list of possible actions to group, prioritize and usually point out a few omissions. Every organization has its own special situation. As a general theme, some of company specific metrics which I have helped clients to address include:
- Often some aspect of cash needs to make the short list of your top 5 to 7 metrics. Why? Because, however mundane it may seem, cash is the financial life blood of any organization. The impact of operations upon this critical asset must be closely planned and monitored.
- For-profit businesses often prioritize critical financial measures such as sales and profit, particularly how to increase one or both.
- Nonprofits might look at the number of clients serviced and associated costs, as more mission oriented. More are moving to include key metrics to help them consider and better address the need for fiscal and financial sustainability.
- Financial measures of performance should also be complimented by operational measurements such as customer satisfaction, product/service quality, and productivity
For those of you who do not have challenges on any of these points, congratulations. For those who feel too much pain from lack of dashboard, an inaccurate or historical orientation dashboard, or just want to say hello, call. Glad to offer any of you a short pick my brain discussion or just to let you vent.