at the high level of operational data you have available , whether it ’ s hours / volume for equipment ( if you ’ re producing a product ) or hours / volume for a person ( if you ’ re selling a service ).
Once you ’ re comfortable with the highest level of information , drill deeper into the financial picture by reviewing revenue / cost per customer , day , hour , square foot , patron , product line , service line , contract profitability , etc . When you ’ re comfortable there , drill deeper into the operational picture by looking at hours / volume per customer , day , hour , square foot , patron , product line , service line , contract , equipment , etc . You ’ ll want to keep alternating from financial to operational just like this in order to see the correlations in your business performance . Finally , you ’ ll want to try combinations , like looking at revenue / cost per hour / volume to get the most detailed picture of what ’ s going on .
Myth # 8 : If I don ’ t see immediate results after making a change to my business , it means that there was no value in changing course .
Developing your business can be compared to cultivating a plant – even the best seeds take time to grow . Trust the system you ’ ve developed ! You have to allow time for changes to take root and results to show . If you implement a new action item , you can ’ t immediately change course the moment the KPIs don ’ t report as positive . A business is a living organism – just like there ’ s no magic pill to heal an illness or make you lose weight – you must allow some time for your action items to affect change . While you ’ re being patient , continue to cultivate your business by monitoring and educating your team regarding progress .
Myth # 6 : Reviewing KPIs is the final step in impacting business performance .
The goal of reviewing KPIs should be to create action items to impact your business in the desired direction . Many business owners believe reviewing KPIs to be the final step because they don ’ t know how to see the next step . It ’ s easy to see that one month ’ s performance may be up and the next it ’ s down , but many business owners don ’ t take the step to determine what they should do about it . It is critical to take the time to reflect upon the period ’ s performance and understand any specific circumstances that might have caused the performance .
When you ’ re developing KPIs , you ’ ll develop from financial down to operational . When you develop action items , you ’ ll go in reverse – from operational to financial . The thinking behind this is that your operational changes will move the needle on the financial picture .
Myth # 7 : It ’ s not important to educate staff members about implementation plans or action items .
Many business owners feel as though they must mandate their staff to change once action items are developed . On the contrary , I would argue that the best way to gain buy-in and greater commitment from your staff would be to educate your team regarding the implementation plans or actions items . Empower your staff to take charge and affect change by creating an environment where an awareness mentality is encouraged . I ’ ve found that most people are good and want to do a good job . It ’ s up to leadership to educate and empower their teams to help develop action items or the implementation plan . When your staff sees that their contributions are encouraged and valued , don ’ t be surprised if you see greater employee ownership of what ’ s produced .
Ryan Clower , CPA is a partner at MWA CPAs + Business Advisors and is experienced in assisting clients with their strategic organizational planning and management . Specifically , Ryan assists clients at MWA with entity organization and reorganization , maximizing sale valuations , tax planning , mergers and acquisitions , and business succession planning . He works closely with dentists , physicians , and a wide range of other professionals and executives who are seeking business advisory services . Ryan ’ s role as a strategic advisor is to help clients to clearly define their ultimate goals ; he challenges his clients to be proactive in developing “ big picture ” strategies for their businesses and personal finances . Once those goals are determined , he then works to develop and implement every step necessary to achieve those goals . You can reach Ryan at : ryan . clower @ mwa-advisors . com or via phone at ( 972 ) 881-1501 .
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