As 2019 comes to a close, we all like to take time to reflect on how we spent the last year - what we accomplished, what we learned and how we have grown.
How are you reflecting back on your year? As a business owner, there are lots of ways to measure your year. We tend to look for quantifiable statistics that will sound good to others – “Yes, it was a great year. Sales were up 34%, we hired two new full time employees and we signed contracts with five new partners….” You know, answers to questions like how much more did you sell, did you make more profit, or did you earn more?
I like data and I like what numbers can tell you. But before you get in the trenches with data and surveys etc., let the first question you ask yourself be: did I fulfill the mission and am I closer to my vision of the life I dream of having? If you begin with this one question, you will begin asking yourself more questions in order to answer the bigger question more completely. The follow-up questions you begin to formulate in your own mind will help you clarify your answer with honesty and humility.
In addition to the questions you begin to ask yourself, do you want to dig a little deeper and look for more answers? Here are four ways to help you review your business performance and measure your own level of success.
Profitability
No matter what, this is important. Every business that is an exchange of goods or service - a doctor, a store front, a non-profit, a service provide – needs to make a profit. Without profit, the business isn’t stable. If the business is unstable, then so is everyone else – your employees, your customers, your suppliers and even you. And what good can you do in the world if your business is not sustainable? Profit is sustainability. No matter what you believe in your heart, no matter how charitable you want to be, you need to have a good, healthy profit.
KPI’s
Key performance indicators are a quantifiable measurement for tracking operational and strategic performance. Net profit margin is a good example and commonly used by most businesses. Performance indicators can be either leading or lagging. A measurement that shows the result of past performance is a lagging indicator. Leading indicators can help you see into the future. If you love data because numbers motivate you, then use them to your hearts content. If you are not a numbers person, don’t get bogged down with the multitude of options. Select a few that will help you measure the area of business where you have specific goals and forget the rest.
Feedback
One of the best performance indicators is feedback from those you serve. Asking your customers and staff for feedback can provide comments that can be interpreted as both leading and lagging indicators. Your customer can tell you how you did in the past and can also give insight into the future. If it’s a good review and refers to a product or service, it could mean more business in the year to come. Feedback can also provide insight into new ideas, pricing, competition and what your customer is thinking.
Satisfaction
If you are an entrepreneur, then the work you do should provide you a high level of satisfaction; it is the work you choose to do. But your satisfaction is not paramount. Just because you're passionate about your work is not an excuse to allow the business to falter. You may enjoy the work you do, but you must be connected to the passion of serving your customer as your true purpose. And this may mean doing things a little differently than you personally would do but you do so in order to serve your customer, perpetuate profitability and further refine your business.
Final thought for 2019
Every December as I begin to think about the closing year, I think back to one memorable moment and a phrase that sticks with me. The phrase poses a question that always comes to mind this time of year.
How did I come across this important question? It happened when I celebrated my 40th birthday by seeing Rent, a rock musical written by Jonathan Larson loosely based on Puccini’s opera La Boheme. There are a number of songs from the musical that really stand out. The lyrics to one of the main tracks, Seasons of Love, goes like this:
Five hundred twenty-five thousand six hundred minutes
Five hundred twenty-five thousand six hundred moments so dear
Five hundred twenty-five thousand six hundred minutes
How do you measure, measure a year?
How do you measure a year? In KPI’s? In sales volume? The song goes on:
In daylights, in sunsets
In mid-nights, in cups of coffee,
In inches, in miles, in laughter and strife
In five hundred twenty-five thousand six hundred minutes
How do you measure, a year in the life?
How about love?
Measure in love
That’s the question, “How do you measure a year, a year in the life?”
Business is a science but it is also an exchange between people. Your business is an expression of love exemplified by your product or service. It brings joy and happiness to others by solving problems and meeting a want or a need.
So this week, as you reflect and close the book on 2019, forget the calculations and formulas and measure your business in love – how well are you loving your customers, your employees, your volunteers, your friends and family and all those who are with you on this journey.
(Note: Rent is on tour in 2020 celebrating the 20th anniversary; you can find tour locations by clicking here.)