No one celebrates Thanksgiving in Taiwan, and my business partner is Canadian. But the majority of our clients are American, so the normal rigors of client calls and sales calls were wiped from the slate, leaving us a day to evaluate where exactly we were at.
It was both inspiring and shocking. If you're a small-business owner, I'd highly recommend you check out this post. I'm going to walk you through how we identified everything we could be doing, what we were doing well and poorly, and how we chose metrics to measure success and let that dictate our projects.
The first thing we wanted to do is figure out exactly what we had implicitly or explicitly committed to.
When we calculated how many internal projects and initiatives we had active, or that we wanted to start in the near future, we realized we had 42 current internal projects that would represent hundreds if not thousands of hours to complete.
(That doesn't include client work.)
These included a mix of new marketing channels to get qualified leads and prospects, creating better materials for pitching and selling, creating better internal analytics and using data better, some other creative assets, some necessities (taxes, banking, etc), building some applications for sale, building some applications for internal use as a tool, improving the quality on our offerings, improving the measurability on our offerings, and so on.
All of these would be worthwhile. Frequently, when we're going about our day, we say, "We should do X!" with a certainty that it would be a good use of time.
And it would, in a vacuum of unlimited time. But as we dug deeper, we realized that 2/3rds of these projects would have a lower value-per-hour to us than simply working on converting more qualified leads into new clients, making our clients happy, and then paying third parties / outsourcers to improve the other processes.
It was difficult to say no to 30+ of the projects on our list. But it's the right call. We've got many potential additional angles of attack that would be valuable and useful to us, but engaging in it takes our eyes off the metaphorical ball.
Most business owners and entrepreneurs I've seen do the same.
"Let's just do this one thing" -- and they accumulate a lot of quick wins, but inevitably many of these projects become one-week, two-week, three-week... ten-week long endeavors, and many never get finished. We have internal projects that are somewhere between 30% and 90% completed from six months ago. That's dysfunctional, but I don't think we're any more dysfunctional than the average business. It's simply what happens when you layer on projects without a clear laserlike focus on just a key areas, and I think it's something most businesses experience.
To stabilize things and get all our focus in the same direction, we created a decisionmaking criteria and chose a very small set of metrics to measure.
We started brainstorming out potential metrics with a goal of getting to around 20 potential metrics, and picking a few of them. We eventually figured out 52 metrics that would potentially be worth measuring.
Some metrics were better than others. There were metrics related to taking specific actions (make a call, send out a proposal), percentage-based metrics (EX, how many clients we're measuring the ROI of our work scientifically, which is too low right now because it requires a lot of upfront data-mining and setup on their end), things like traffic and qualified leads, average time to complete sales cycles and fulfillment cycles, contacts, assets, hours, types of revenue, credibility, usage and utilization metrics especially of key systems, staffing/contracting, and even awards and recognition won.
In the ideal world, we'd like to see almost all of those improve, but great metrics should be like a very clear compass. There's no exact number of metrics that are too many, but at some certain number they stop becoming a a way to laser-focus your initiatives and measure success, and instead become a mess of loud noisy information that's a chore to look at.
We eventually settled on eight metrics:
*Booked revenue by week
*Net profit by month
*Proposed money in play
*Fulfilled/cleared revenue by month
*Number of proposals made
*Followups on proposals
Interestingly, there are no metrics for tools, assets, awards, or hiring. 5 of 8 metrics are cash-related, two are sales-related, and one is process-related.
We spent a lot of time on quality recently over the past few months, on speed of completion / cycles, and on our skills. So, it's not that we're neglecting those areas -- they're crucial -- but they're not the bottleneck to more success.
Looking at these metrics dictated to us which projects we should choose. We did select projects to build internal assets, creative, and systems based on these projects, specifically client-facing stuff that would improve our revenue.
We're aiming for 10% week-over-week growth in "Proposed Money In Play" and we formalized sending out proposals as a stage in our sales process. It's not always necessary to have a formal proposal, but now it becomes a binary yes/no decision as to whether we've sent one out.
We figured that proposals made and followups on them serve very well as proximate measures for other sales success. We don't want to optimize for calls made, leads, or any such thing. Also, it's easiest to send proposals for more cash in play to previously happy clients, so it naturally checks that that out too. Thus, with just these two metrics we cover most of the sales process.
Booked revenue keeps us honest, to make sure our in-play money is actually being converted to sales. We'll need to do some sort of rolling average since this one is going to be more variable (we can influence but can't control when deals close) and the numbers are going to have huge variance until the sample size gets bigger.
Fulfilled/clear revenue proxies very well for client success, speed of completion, etc. We have a lot more control over this area than the sales areas.
Then, we look at net profit and cashflow to make sure that our expenses aren't out of control and we're not going to hit a bump in the road, respectively. After having made the cardinal sin of business and not managed net and cashflow previously (revenue! revenue! revenue!...), it's a mistake I just won't make again.
Finally, the last metric is a more temporary one -- our compliance with our sales systems is haphazard right now, with people taking notes in all sorts of places. We had never written up our procedures into an Operations Manual, and they were inconsistent. So we spent the rest of yesterday rapidly re-configuring our sales process and documenting the heck out of it. Now, people don't just jump onto processes over night, and you can't be tyrannical about changing people's workflows. So we'll look to build compliance with the systems into the high 90% range over time.
Are you focused?
It was a fantastic working-Thanksgiving here in Taiwan for me. If you want to get similar gains in clarity, here's five questions to ask yourself quickly if you're running a business:
*Do you know all the internal projects you've committed to do or want to do?
*Do you know how long they would take to complete?
*Do you have a clear, small set of metrics that you can optimize your company by?
*Are you letting your clear metrics dictate your projects, or picking projects haphazardly?
*Have you identified what you shouldn't be doing, because it'd be more effective to grow your revenues and pay someone else to do them for you?
If not, give it a whirl. Brain-dump the projects, brainstorm potential metrics, discuss and pick metrics for your company, and use those metrics to select projects. It'll take you a while -- at least a few hours of focused and uninterrupted time -- but the the feelings of relief, clarity of purpose, and control of your business are simply fantastic.