The stability of your business will rely on a scoreboard. A simple number system that tells you exactly where your business is at and what changes you need to make.
The 2 most important numbers are:
While these 2 numbers don’t tell the whole story, they should be the only 2 numbers you obsess about to make sure your business stays alive. It’s like the heart rate and oxygen level for a patient. While there are many other metrics that are important, those 2 metrics tell you how well a patient is doing. If it goes above or below a certain range, you know there is a problem and it must be addresses immediately.
Depending on your business model, you will need to change the Metrics of those 2 areas (Cash Flow & Customer Satisfaction) to match your business model.
In our website design business, we track:
How many clients we have active within the last 8 weeks
How many of those clients say they absolutely love their new website
The first number tells us roughly how much cash flow we having coming in. The client pays a deposit, and sometimes 1 or 2 other payments, with an average dollar amount per clientele. If we are below a certain number of active projects, it means we need to increase marketing & awareness of our brand to ideal clients.
The second number tells us know we are doing a good job. If we’re not having a high customer satisfaction rating, it means our process or training is off and needs to be fixed.
Dashboard metrics become more difficult if you plan to Grow your business to hire a new person and take on more customers or clients.
In a minimalist business, or a Company of One (from Paul Jarvis’ book), you should set a upper limit for growth. In a Company of One, you are staying lean with just yourself and external consultants / independent contractors of things you aren’t good at. In a Minimalist Business (or small team of 3 to 5 people), you are also setting an upper limit for growth.
The stress in the business is trying to grow - more customers, more team members, more systems, more management.
Instead, a better way to scale while watching your Dashboard metrics, is to use the system created by Alan Miltz called The Power Of One, where you adjust the performance of your business using simple changes in pricing, volume, expenses, invoicing due dates, project due dates, and so on.
In the Power Of One, increasing Volume first is often the most dangerous and chaotic of the options, because more customers and activity means more resources, team members and support to make it happen. Instead, focusing on improving your core processes, turnaround time and increase prices without having to incur more complications.
In fact, you can accomplish a lot more profit and margin in your business by creating a more lean, efficient business without hiring more people or buying more expenses. This is what Mike Michalowicz calls “finding money within your business” which is already there, just waiting to be found, by becoming more efficient and instead of buying more things, focusing on how to make your business better, leaner, faster, higher quality, by just thinking and creating systems. Just like the LEAN methodology of constantly eliminating waste in resources and processes can help find money within your business.
But the Power of One is yet another tool to find money already within your business.
Instead of growing, being more complex and messing up your business, focus on minimalism. Reduce steps, reduce waste, get rid of redundancy and excess and focus on developing a minimalist process.