Every great business has its verbal story: how it got started, where it’s going, what the culture is and who the key characters are. But while your words are important, your numbers are your validation. Without understanding what the numbers are telling you, you can’t ever quantify what your business is actually doing—or not doing, for that matter.
Managers, employees, clients, vendors and lenders can all contribute and influence the numbers you see in your financials. However, only one person is accountable for it all. Do I even need to say it? Yep, it’s you—the owner, leader and chief bottle washer.
Being able to validate a number on a specific financial indicator is great. Knowing what you actually spent on a certain expense or that you paid an employee a particular dollar amount is important. But that’s just technician work. The checks and balances that you can get from documented systems can be managed by a bookkeeper.
Understanding the common goal of the company, departments and positions versus what is being produced is great and fulfills the management work needed to tie the story to reality. But being able to compare the numbers to the future needs of the company and change accordingly is the real entrepreneurial work.
Missing key systems, such as your vision for leadership, can make the challenge even more difficult. If you don’t know where you’re going, then you don’t know where you need to be and, hence, what the story should be saying.
So, what do you want the story to be? How do you want to end it? Many great authors will tell you their best strategy is starting with the ending and working backwards. Doing so will allow you to write the middle so that it delivers what you need.
Write Your New Story by the Numbers
Use these key systems to see where you are now and evaluate your long-term plans.
- Write a clear and defined vision that speaks to your end goals for the company.
- Having a vision is considered the Holy Grail by all successful leaders: when you know your end goals, you can change your strategies accordingly.
- Tangible Indicators:
- Identify your tangible indicators. This could be revenue targets, vacation days, profit margins, time, number of employees and location.
- You should be able to extract these from your vision.
- Intangible Indicators:
- Pinpoint statements that describe what you want but aren’t yet identified by a number, like “Stunning Customer Service,” “Exceptional Quality” or (my personal favorite) “Happy Employees.”
- Take your statements and set them on a scale from -10 to +10.
- For every five points, create a description that would represent that number, for example: “+10 means you enjoy your workload, have clear expectations set for your job, feel that communication between managers and leadership is outstanding and wouldn’t change a thing.”
- Identifying intangible indicators can be a bit harder, but it’s just as important as setting up your tangible ones. Once you follow this framework, you’ll have created a rating system that’s pre-approved and marks the measure you set.
- Key Strategic Indicator Report:
- Create a system that tracks your tangibles and intangibles in one report.
- You’ll need to refer to that system month after month, quarter after quarter.
- Run this report consistently throughout the year and identify what’s growing, what’s not and what needs to be.
- Historical trends are key in identifying decisions you made to influence your numbers.
So what do you want? What do you need? What decisions do you make to ensure success? Knowing how to read your story is empowering. By using key systems such as your vision and your Key Strategic Indicator Report, you’ll be able to ensure that you stay on track toward your long-term goals.
Learn more about Key Strategic Indicators and how to use them to track your progress by scheduling time with an EMyth Coach: