For a lot of business owners, the concept of real leadership is quite foreign. Small businesses around the world are filled with one- and two-person businesses, or companies that rely on third-party suppliers for shipping, fulfillment, and so on.
The question a lot of these business owners might ask is simple, “how much “leadership” do I really need to know to be successful?”
In reality? Likely not too much … but they still have to do some.
For example, you – as that small business leader, MUST still envision things like your client fulfillment process. From my earlier example, who is going to fulfill that shipping? Is it UPS? Fedex? USPS? Maybe even Uber, if you’re delivering locally.
Any way you do it, you still have to think it through.
You still have to be a leader.
The same goes for every other system in your business.
They ALL require leadership. They all require you to step into the shoes of the entrepreneur and do the strategic thinking and development your business needs.
That’s a huge assignment, but it is the work of the leader. Can you do it in one sitting?
No. It might take months to truly sort it all out.
But this is the entrepreneurial commitment you made when you opened the doors to your business, no matter how big or small it is.
To be a leader, you have to do the work of Leadership!
…Any business owner can walk through their business, listen to their employees, look at their actions, and use common sense to understand how things are going.
In fact, years ago, this was actually a management theory taught in business schools – “Management By Walking Around.”
It’s a valuable skill, but it isn’t nearly enough.
The truth is, as the leader of your company, you HAVE to understand and use metrics.
In other words, you, as the leader, must quantify your business or risk never being able to see it clearly. Until you do, you’ll only ever “see” what you personally see or hear – and the problem with that?
Your eyes and ears can never see or hear everything – and because they belong to you, they are attached to your personal biases and experiences.
An owner who refuses to quantify and use metrics within their organization is the leader whose decisions will always be based on misinformation.
“Fake news,” in other words…
Believe me, as a tax professional, I hear it all the time – “How can we not be more profitable! We’re working sixty and seventy hours a WEEK!”
The answer, of course, is no one has dug into the metrics of the business to see where the profits are being lost.
So while we aren’t going to take an exceptionally deep dive into specifics, it’s critical that you, as the leader of your company, understand what to look for and where to look for it.
To make it easy, let’s concentrate on three specific types you can begin to dig into today to move the needle in your business:
- Strategic Metrics – by their very nature Strategic Metrics are designed to give you the big picture. These might be sales data in comparison to last year, or the previous quarter, or even measured against the goals you’ve set. As a whole, they simply give you the “30,000 foot” view.
- Systems Metrics – have been designed to allow employees and managers to see what’s really happening “in the trenches.” You might have heard or read about research into metrics that looked into seemingly innocuous things like the color of suit a salesperson wore in relation to whether they made the sale or not. This is the sort of granular information – and measurements – that need to take place with Systems Metrics. In short, Systems Metrics are designed to determine what is working and not working within every system in your company.
- Lastly, we have Business Metrics – These are designed to allow you, as the leader, to monitor ALL of the business as an integrated whole. These are based on the simple fact that every component of the business has a reaction elsewhere in the business. The idea here is to understand, for example, those sales figures I just mentioned as Strategic Metrics and how they have been impacted by – let’s use a modern example – the pandemic. Perhaps we learn that online sales are up, brick-and-mortar sales are down, and, as a leader, you can look to your Systems Metrics to determine how to most effectively spend advertising budgets most effectively.
Here’s the challenge: you don’t know what you don’t know, and designing systems to quantify your company is difficult when you aren’t sure where to start.
Guess what? There’s no “wrong” way to do this!
This week, look at the area of your business where you spend the most time – that could be sales, marketing, production, whatever; and analyze it.
Look into the metrics I’ve shared with you and really dig into what makes that system “tick.”
My experience tells me you’ll find things that need to be sorted out, places where money is being lost, and systems that can be tweaked (or created) to make your business far more effective.
I’d LOVE to hear your results when you actually do this.
I know I mentioned you’ll likely “find” some profits – or at least some wasted money. I’d really like to hear your success stories, but don’t hesitate to reach out to me and the team if you have any challenges with the “numbers.”