I suspect you don’t check your income statement every day. You likely don’t check it weekly either. Maybe you check it monthly. Maybe. But probably not. For many entrepreneurs the income statement is the only way to measure the businesses health. More often than not, your learn about your businesses profitability during that annual call with your accountant.
My intention is not to kick you in the ass and get you looking at your P&L (profit & loss statement, another term for income statement) every day. That isn’t practical for small business owners. But you do need to keep your thumb on the pulse of your business, and you do it with instant metrics.
An instant metric is a way to immediately assess the health of your business – any time, any where. Something that instantly tells you if life is running smoothly or if life is running all over you. One of my favorite examples is from my friend Randy Morrow, who passed away in February of this year. He worked as a realtor, and made his money by selling houses. The more you sell the more you make. Simple.
The prospect funnel is just as simple. The more houses you have on the market, the more likely you are to sell houses. Randy could, with a certain degree of accuracy, determine what his income was going to be like based upon the number of houses he had on the market at any given time. If he had five currently on the market things would be okay. If he had one or two on the market, he was in trouble. And if he had ten, well hot dog, business was gonna be great. So what was his instant metric?
He bought 10 door lock boxes. He would use one for each house he actively had on the market, and the remainder would sit on his office window sill. Two on the window sill meant things were pretty darn good, but he would push to increase his inventory. Five or more on the window sill and all guns where on getting more houses. From the picture he sent me (see below) I (and he) could tell instantly that business was good.
Simple, effective and instantaneous. That’s the power of an instant metric. What’s yours?
To Randy – I miss you brother! I await the “slap to the back of the head.”