Fully ninety percent of businesses fail within the first decade of start-up. Nine out of ten. The numbers are alarming. Yet almost all businesses owners are under the hypnotic spell that it will never happen to them, this ‘business failure thing’. This is their self-talk, “ninety percent may fail but it won’t happen to me!”. Okay. Can you name 5 businesses in your city that are at least 50 years old? Correct. Businesses go out of business at an alarming rate.
The Universal Constant
The only constant in life and business is the certainty of change. Your environment will change. Your people will change. Your competition will change. Your clients will change. The government will change. Interest rates will change. What makes it even more challenging is that the rate of change is accelerating. Successful businesses today need to be nimble just to keep up. Measurement and your ability to make sound decisions as a result of it will keep you and your business sustainable.
Adjust The Sails
The primary way for you to know how to adapt to change is to measure your results so you know where you are and what is and isn’t working. But you also have to know which activities to change to produce better results. Simply measuring your results is not enough. That’s why masters measure and they measure consistently. Measuring, comparing, tweaking.
For example, if you read Warren Buffet’s annual report to shareholders, you’ll see the whole thing is filled with measurements and comparisons: How he’s doing today versus with how he did last year. This quarter versus the same quarter a year ago. Month over month. Current performance versus projected performance. Buffett understands that the slightest numerical variation can mean the difference between stupendous success and catastrophic failure.
Basic Business Requirement
Without measuring, how will you know if you’re getting better or worse and, equally important, what caused these changes and what should you do about them? At its most basic business optics relies on measuring the trends and relationships between the numbers…knowing what to measure, how to measure, what it all means, and what to change so that the appropriate problem is identified and the offending activity is corrected. In a nutshell, measure the effect and change the cause. It’s that simple.
Know The Score Outside Your Business
Dr. Alexander Elder, a leading financial psychologist (he works with the world’s best traders) states that the only thing that separates the top 1% traders from the rest of the pack is that the top traders record and review every single trade. Put simply, great traders keep meticulous records. Great business leaders similarly know the score. Great athletes do the same. The list goes on. You don’t have to measure everything, just a range of numbers that are critical to your results within your sphere of influence.
So be disciplined. Measure and move forward through the guidance of what it is you are measuring. Whenever I meet a business leader, this is one of the first 3 questions I ask. “What are you measuring?”. The answer I receive tells me a lot about what is happening in the enterprise without being privy to other facts.
Are you a master, or an amateur? Key.