In the time that I have worked with businesses, across many different industries and levels of financial worth, I have come to really appreciate the way that having money in the bank is NOT your key indicator of success. It’s true that we are in business to make money, after all – we all need to eat, but your bank balance is not going to tell you if you’re working harder than you should, or if your staff are experiencing true job satisfaction, or if your customers are recommending you to their friends. If things go bad, your bank balance will be affected eventually, but by then the damage is already done.
In order to run an effective business, one of the first lessons to master is the art of being pro-active. Anticipate problems before they occur, and protect yourself from potential threats to your business’ prosperity. Many small business owners and managers will use KPI’s (Key Performance Indicators) to track various targets and activities, to keep their finger on the pulse of the business. If one of these indicators drop below a performance level, they get a heads-up that something needs their attention. This is a fairly standard practice, and most entrepreneurs will already be familiar with how it works, but that’s not the main topic we’re looking at today.
If your business is doing well financially, it could actually be masking a deeper issue that would impede your ultimate happiness. People go into business for themselves for all kinds of reasons. It could be to get more fulfilment than being an employee, or for financial independence, being their own boss, carving the path of their own destiny, or even just a way to do what they truly love and get paid for it. Whatever your reasons, don’t lose sight of them because you’ve been successful enough to get some money in the bank. Of the KPI’s that you track, be sure that you have captured a whole-person approach to what really equates to success in your life. If you have to work 16 hour days, are you really living the dream? If your family relationships suffer because your business activity takes you away from home too often, is it really worthwhile? If you started out doing what you love, but find that now it’s a chore and all the joy has gone, what’s the point?
True happiness comes when everything is in balance. One of the google definitions of the word “balance” is: “a situation in which different elements are equal or in the correct proportions”. This means that if money is one of those elements, then there must be at least one other element of equal importance. What that other element is depends on the individual, but I have found in my life that relationships (with people, not things) have been a far greater source of happiness than money.
But, how do you measure something like family happiness, or enjoyment of your business activity? I suppose that, technically, you could develop a system of rating the amount of time spent on business, family, social, and entertainment activities, and maybe a 1-10 scale of how enjoyable certain activities are but, to be honest, that would be like trying to measure water with a ruler. It just doesn’t capture the essence of the subject.
I am a numbers person. I love maths. I really love spreadsheets, and I really really love tracking KPI’s. But, life is about balance, isn’t it? This is where I let go of the numbers. Instead, I go by feel. I understand that not everything can be measured with numbers, and letting other methods guide me in determining my level of success.
Think about the different elements of your business. Use a 3-way approach (ie: operations/finance/marketing) and consider what might need tracking: something that doesn’t immediately affect the bank balance, but is still important to the purpose and original reason for going into business for yourself. Some things can still be tracked with numbers, but don’t discount something just because it can’t be counted. When you go right back to the start, and consider the excitement you felt about starting your business, what was the object of that excitement? What will give you real happiness?
Example 1: Peter is a timber furniture manufacturer. He has a small team of employees, and margins are always tight. There is one employee, Paul, that constantly falls below production targets. Peter has tried to encourage him with rewards and incentives, but Paul just can’t seem to manage the speed of everyone else. The end quality is good, but Peter has to consider letting Paul go before he ends up costing him too much in productivity. BUT, Paul has such a positive effect on the morale of the entire group. Everyone likes him, and he has this knack of calming disputes between other employees, and diffusing tensions when the pressure is on. Peter realises that although Paul costs a little more to employ than the others, his contribution in other – less measurable – ways is more important than the productivity cost. If Peter were to have let Paul go, he may have found that the morale of the team dropped, disputes would escalate instead of being nipped in the bud, and after everyone stopped enjoying their work, the quality of the end product would suffer, his reputation would be damaged, and long after everyone stopped being happy, the business would stop making a profit.
Example 2: Mary runs a catering business. She absolutely loves cooking, baking, and in general, all kinds of food. Her recipes are used precisely, so that she can deliver a consistent result every time. Measuring is second nature to Mary, and because she has her systems in place, she has a great reputation, and is booked out for months in advance. But Mary finds that although her staff follow her recipes to the letter and to the gram, their end product just doesn’t seem to “wow” the client, the way Mary’s do. If she can’t get the same result from her staff, it means that she will have to do it herself, which means working longer than she is capable of as her business grows. On paper, everything is the same, but after observing her staff over a period of time, she realises that there is a certain touch, an instinct that cannot be taught, that her staff just didn’t have. She was never really aware of it herself because she’d always had it, but when she began hiring helpers, she didn’t know to look for that same flair in the applicants. In this instance, the decision to let all her staff go and start again with people that demonstrated that same un-measurable instinct, was necessary to preserve the reputation, and the long-term success of her business.
I hope that as you look past the numbers in your business, you will see what really makes it special, and you will discover how to enhance that quality, that doesn’t need numbers to qualify itself.
Next month, we will get back on the numbers trail and discover how to achieve the seemingly impossible target of your long-term goal.
Until then, keep the numbers working for you.
Evertrue Business Solutions