Push Through With Analytics

Every business owner has been there at one time or another: you get to a
certain point in your growth, and you stall. Maybe you’ve grown your
business a little. Perhaps you’ve grown it a lot. But if you’re reading this
article, you probably don’t want to be done expanding yet.
If you’re not growing as fast or as much or as profitably as you want to, you
can take your business skills to the next level. But to get to this next level,
you’ll need heightened abilities and better information. You’ll need analytics.

Take a Deep Breath and Commit to Spreadsheets

Most Business Owners or Entrepreneurs (I call them BOEs) like “doing.” They
like to pound the pavement or create stuff or hire people. By their nature,
BOEs gravitate towards tangible activities with well-defined outcomes. That’s
probably because “doing” got them started on the road to success. But being
a “doer” will only get you so far.
To scale your business dramatically and profitably, the founder will have to
leave the “doing” to others and start focusing on analytics. But, of course,
we all know that paperwork and analytics don’t provide the same immediate
gratification as tangible activities. Maybe that’s why so many business
owners avoid analytics. But if you want to grow your business into a 7- or 8-
or 9-figure enterprise that fires on all engines, you’ll need data, numbers,
and spreadsheets.

It’s Business Pilates

If you’re not sure what Pilates is, it’s an approach to fitness that emphasizes
low-impact flexibility, strength, and endurance. It builds postural alignment,
core strength, and muscle balance. And it’s an excellent metaphor for
analytics.
Benchmarking your business against industry norms is an excellent way to
build postural alignment. You’ll be properly positioned. You’ll understand
how to build your core strengths. The benchmarking process also measures
your strength and balance and identifies what you’re doing well and what
you need to do better.
Start by focusing on revenue generators (marketing, sales) and loyalty
functions (fulfillment, delivery, customer service). The goal is to assign
benchmarks to both the tangible and intangible parts of each division and use these benchmarks to empower your team in ways that help them understand where they are succeeding and where they need improvement.

Embrace the Power of Spreadsheets

Start your analysis by listing and mapping all your company’s tangibles. The
tangible part of your business is, by its nature, easy to measure. These
elements can usually be expressed with numbers, such as revenue, gross
income, cost of goods sold, net profit, expenses, and other measurable
quantities. You want all this information mapped out in ways that allow you
to compare your performance to the industry averages.

Where Do You Find Industry Averages?

Getting detailed information on your industry isn’t always easy. An industry
consultant may help. Many industry associations offer very detailed
competitive reports, usually for a fee. If you know people in your industry
that are not your direct competitors, talk to them. Call in favors. Pay experts.
Do what you need to do to get the information you need to see if you are
doing better, the same, or worse as other businesses like you. Learning
about the details of your competition is a great way to benchmark your
business.
This kind of analysis takes a lot of time and energy, but it reaps big rewards.
Once you’ve mapped out your tangibles and can compare them to industry
averages, you’ll quickly identify problems and opportunities. Are you doing
better, worse, or the same as others in your field? When you evaluate and
compare the tangible categories of your business, you’ll get a better
understanding what’s average and what is exceptional, including:
– Your charges and prices compared to others in your industry
– Share of market
– Margin comparison
– Your facility costs and overhead
– Departmental costs in comparison to your competitors
– Material costs

Don’t Forget Intangibles

While it can be satisfying to tally up numbers and create charts, don’t forget
about intangibles. Things like performance, quality, service, and ability are
hard to measure, but your people still need to be better at all of these things
for your business to succeed. So how do you do that?
Instead of evaluating individuals, create benchmarks for positions instead.
Start by creating a set of ideal attributes required to do very well in any given role. Think of the position as a “personality.” For example, you may
want customer service employees to be friendly, empathetic, and outgoing.
On the other hand, maybe you want a CFO who is a conservative, dedicated,
perfectionist.
Once you get personality benchmarks in place, it’s easier to make
dispassionate adjustments to your team. For example, if you believe your
accountants should be dedicated perfectionists and you have a team who
isn’t organized or passionate about your books, it’s time to make a change.
Of course, we’re talking about people, so there are no absolutes here, but
assigning ideal attributes will help you get on track to building an stronger
department. When your departments are compatible in style and
temperament, you’re giving your company the best chance for success.

Analytics Are Time-Consuming, but Worth the Effort.

This article is a fast overview of analytics, and these exercises just scratch
the surface. No matter how big or small your company is, analyses are a LOT
of work. But a solid analysis is one of the only ways to create more reliable
systems that will propel your business forward. So put in the work now, and
everything you do in the future will be easier, faster, and more successful.
Want to talk more about benchmarking and analyses? Email me at
[email protected] or check out my best-seller, The 7 Stages of Small
Business Success.