If you can’t measure it, you can’t manage it. This is a true statement that applies to any company and to any manager.
If you are trying to have more cash in the bank for example, you need to understand how it is being spent and what the cycles of cash in your company are. These cycles can be observed on a daily, weekly or monthly basis.
Just like cash flow, there are other parameters that need to be measured in order to manage them. Two of the most common are the accounts payable and accounts receivable. When you track these numbers, you develop a sense of when they are within the acceptable levels, and when they get out of hand.
These are what we call key management indicators. Specific information points that, when understood and closely monitored, provide a good picture of the company’s performance and health. Like these, there are a number of indicators that managers use to have a bird’s eye view of the company. Managers develop a keen understanding of where these indicators should be and act when they notice that they are going astray.
If you manage yourself, as a one-person company, these measures can give you a time for pause. They are a quick reminder that your business is more than the next task at hand, and that you need to keep your priorities in line with the evolution of your business and your goals.
If you manage a more developed company, these parameters will help you monitor the performance of your key employees and see who needs help and who needs praise.
The trick is to measure the right parameters. The ones presented above are the basic ones; but you need to find the ones that help you stay focused on your company goals. These may be in production, inventory, sales, research & development, marketing and a number of other areas that will highlight the goals and the focus that drives the company’s strategy.
You don’t need to do this alone! We at Lanata & Solis Business Consulting Services, L.L.C. can set you up and translate what all the numbers mean and show you how they can be managed. Give as a call today and we will give you a complementary one hour appointment in your office to assess your needs, and to create a tailored solution that addresses your requirements.