Measuring success: How to know if your business is doing well
Picking the tools to ensure your business is the best it can be
How do you know how well your business is doing? It sounds like a simple question but, as Hany Mustapha of www.electronicworkplace.com explains, being able to measure success is the key to making your enterprise a real winner.
Why are you in business?
Many entrepreneurs would mention the freedom, the mission, the opportunity. Ultimately, though – surely we’re in business to make money. Money not only allows us to eat, fuel the car and pay the phone bill – it also provides the only objective measurement of our performance. And that’s the key – measurement.
We may have a fabulous product set, deliver the finest service and have a wonderful infrastructure (well – and then we wake up!) but without the ability to measure each of those, we are in danger. Competitors will start nibbling at our heels, opportunities to improve customer service will not be identified, inefficiencies in our costs are not addressed.
Measurement is not something that happens three months after the end of the tax year or every quarter when we do the VAT return… to be truly effective it needs to be happening all the time. Information needs to be accessible to the right people at the right time.
Lots of questions… you need answers!
Do you know how much it costs you to find another customer? Indeed, are you actively seeking new customers? No – really going out there and telling the planet about how much better off they would be by using your products?
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How much does that cost you? Where are you getting most bang for your marketing buck? How much would it earn you to increase what you’re doing where it really works?
The first element of business intelligence is making sure you collect the right data! There are only two ways to increase profits – raising revenues and/or reducing costs. With companies of our size – up to 10 to 15 staff – the easiest way to increase profits is to raise sales. We all believe that our costs are at the minimum level to maintain reasonable business function.
Are you sure? If you employ someone who’s primary role is to answer the phone – are you really getting value for their salary? Think about it – salary of, say, £14,000 pa. Add your National Insurance, lose four weeks of holidays / time off, together with, say , another five days off sick over the year and your receptionist is costing you around £330 per week.
How many phone calls are you taking? 20 a day? Do you know how many phone calls you receive? Shouldn’t you – after all – it’s probably costing you £3 every time it happens!
What would happen if you also tasked that person with making outbound calls while they weren’t busy. Startups.co.uk has some fantastic resources to help you get names and phone numbers… use them! Get your receptionist to make those calls – and then measure the results.
It could halve the costs of receiving calls and free you to follow up the results of those calls – reducing sales costs, and earning you money – raising revenues and profits Great in theory – but how do you move it out of the theoretical and really start measuring how much every element of your business earns you or costs you?
Turning data into information
Phase one was outlined above – gather data. This will probably mean redefining the way you and/or your staff do business. Redefine your process to enable you to gather data on your operations.
Phase two is what you do with that data – turning it into information. Information that you can make decisions on. This doesn’t have to be expensive, complicated or time-consuming. At it’s simplest – remember Excel? You know – that spreadsheet package that comes with Office? You can do some useful number crunching and produce some valuable graphs.
If you gather your data in a consistent manner, Excel can maintain lists of data that can stretch to well over 15,000 items – that’s a lot of phone calls! And it has some excellent built in functions to help you summarise lists into really useful information.
If your list is smaller, try just selecting the whole list and clicking the chart wizard button – you’ll be pleasantly surprised by what Excel can produce. Take an hour out to wander around the Microsoft Office Assistance Centre website at: http://office.microsoft.com/assistance
As you see the value, act on the results and see your business improve, you’ll probably start finding the limitations of Excel as a business intelligence tool. You need to get into databases. And again, Microsoft Office Professional has a great database tool – Microsoft Access. Built in to Access is a very powerful reporting engine. If you don’t know how to use Access – get some training or get some folks in to do it for you. Again, check out the Microsoft Office Assistance Centre on the web. The payback can be immediate and will almost certainly exceed your investment.
Moving up the food-chain, there are lots of tools out there to help you once you really start using Business Intelligence – Crystal Reports at under £1000. Wizards help you design customised reports to analyse your data and turn it into information.
Business Objects (www.businessobjects.com) is industrial strength (and unlikely to cost you less than £50,000 by the time you’re done!) but it will deliver exactly what you want. The key thing with these tools is that you will need to learn how to use them.
Certainly if you’re to get anything beyond the simplest analysis done. It may be that you don’t have the time or the inclination to become database analysis specialists. If that’s the case, don’t give up! Try the independent specialist route – companies like Iometrics (www.iometrics.net http) will discuss, define, design and implement a number of customised reports for you. All you have to do is tell them where your data is and what your key measurements are. Iometrics comes in around £5,000 – and guarantees your money back within six months.
Advantages and Disadvantages
Microsoft Excel /Access
- Advantages – DIY, Low cost, Reasonably flexible
- Disadvantages – There may be a learning curve involved, Limited power
Crystal Reports /Business Objects
- Advantages – Considerably more powerful specialist tools
- Disadvantages – High learning curve, Can become expensive, No guarantees you’ll get it right
Specialist Services Customised solutions
- Advantages Some offer you money-back guarantees
- Disadvantages – Not as inexpensive as DIY
Also, find out how to keep track and measure your web traffic here – this can be an indicator of success.