Picture this: you’re driving down the freeway, look down at your car’s dashboard, and, in a second you determine:
• Your mileage
• Your speed, and
• The radio station you’re tuned into.
Suddenly, your gas light goes on and you realize, “oops, I forgot to get gas!”
Many business owners operate their business like the gas in their car. They get mired in the day-to-day and forget to consistently measure how their business is doing until they see that warning light.
By the time you see the warning light, it’s already too late. You’re operating from a position of desperation versus leading powerfully.
One of the key processes missing from many business owners is a prosperity system. A prosperity system is simply the processes surrounding the fiscal health of your company.
When I first start mentoring my Profitability Lab Members, the prosperity system is one of the first foundational systems we check. Oftentimes, the business owner is stuck in the daily routines of bringing in money but doesn’t actually check to see their financial performance on a regular basis. They have an idea of where they stand, but they don’t really know. One of the symptoms of this lack of structure is delayed decision making, whether it is hiring someone, investing in capital, or investing in themselves.
If you don’t set up a regular meeting with your CPA, CFO or bookkeeper, review your numbers consistently, and create action plans around the numbers, you’ll be running out of gas before you know it.
As a business owner, it’s critical to your success to have a process to review your company’s numbers consistently just like the gauges on your dashboard. Getting the process started is easy:
1. List the numbers that are critical to the success of your business.
2. Have your financial person run the reports.
3. Set a recurring 5 minute appointment with yourself and your financial person to review the numbers. The frequency of the meeting depends on your business. For some businesses a daily look is essential. For others, a weekly or bi-monthly review works.
As a leader, it’s wise to engage your team in moving the company’s key numbers in the right direction. Post the numbers in an easy-to-understand visual aid, like a thermometer that measures the amount of sales.
Use your meetings to brainstorm on how everyone can affect the numbers. Gather feedback from everyone, get buy in on the action items to be implemented, ask for specific promises in the action item, debrief at the next meeting, and celebrate successes.
Simple incentives work, too. Distribute rewards for meeting measures, like gift cards when they meet a particularly challenging sales objective or a lunch when you hit the monthly revenue number.
When you develop a system around your numbers, educate your team on the numbers, and get them involved in reaching those numbers, watch how much easier it is to meet your measures.