The Easiest and Fastest Way to Power Up Your Company’s PerformanceOct 06, 2020
All You Have to Do to Power Up Your Business’ Performance is Track
Your Most Important Numbers Every Week and Act On Them
I have a spreadsheet tool to help you with this, but you don’t need it. You don’t even really need a computer, although it helps. You can use a white board, notebook paper, ledger paper, if you can write on it or with it it will work. This is something that you can do NOW that will help you NOW.
I’m going to tell you a story below to illustrate this point, but there’s really nothing like YOUR story.
Here’s a story that illustrates the power of numbers. Victorian Barns is a shed company serving a mid-sized market. Mike the owner had hired his Grandson, Tom to take over the business. Day one during my visit we sat down and talked about the business for a couple of hours. Victorian Barns had been in business for 30 years. Mike took a modest salary every year, but it had been over 10 years since he took any distribution or bonus.
The financials were very difficult to read and it took me awhile, but I was able to figure out their gross profit % is 40%. We checked their invoicing and they had been averaging $40,000/week in production the last six weeks, which was consistent with their prior year financials.
They had $280,000 in sales backlog which if you do the math is 7 weeks. And awfully long time to wait for a shed. During the conversation, Mike had said a couple of times they didn’t have a sales problem. He also said several times, “We can’t find good people.”
They showed a profit of $120,000 last year. What that means is if they could do another $5,000/week x 50 weeks, that would be $250,000 in additional sales or $100,000 in additional profit without increasing staff.
Tom and I put together a simple metrics dashboard based on their sales funnel, their production, and a few financial numbers. I wasn’t long before we figured out how to fix the bottleneck in production and the backlog started falling. We were easily able to see the backlog was starting to fall as production rose and we were going into the off-season. They hadn’t done any advertising in awhile and weren’t really certain what was working. We wanted to make sure we had plenty of work to do for the workers and came up with an aggressive promotion. There were mixed opinions about whether or not newspaper advertising worked. We were tracking the lot visitors turns out it was not.
It’s four weeks later, and these things have been discovered
- We’ve identified that production is our constraint and fixed the bottleneck within production.
- We saw that the constraint had shifted now from production to sales and ran a promotion keeping the workers busy all the way through the off-season.
- We found out that newspaper advertising at over $3,000 per run wasn’t a good investment for us.
- We looked hard at our digital presence LAST YEAR, switched service providers and maximized our digital footprint.
- We tested raising prices on on site assembly, particularly on lower cost units and were able to see our productivity per hour increase by 15%.
Now it’s April, COVID has struck, and we had already shifted toward virtual selling before it even happened.
All it really took is sorting through the story of the numbers and setting up a very simple tracking tool with these weekly numbers.
Every Wednesday morning the management team goes over them with me over the phone using Google Docs. We do a zoom meeting if necessary. We were doing this before COVID even started.