I was driving along the highway a couple of days ago very early in the morning. Real early – as in still pitch black out early.
Suddenly a deer jumped out of the long grass at the side of the road and ran from right to left in front of me.
I veered to the right – trying to put my truck where the deer had been rather than where it was going to be.
And all you deer lovers out there will be very happy to learn that no deer were hurt in the making of this post. Yes – I managed to avoid hitting the deer, and it avoided hitting me.
So why am I telling you about this little incident?
I promise you it’s not to bore you with my deer–saving heroics.
I’m telling you this story because I want to compare my deer-miss to the way the majority of small business owners run their business on a daily basis.
You see, most small business owners fall into a rut of “just going along” day after day, hoping they get to the destination (read, financial results) they really want. It’s a lot like that “road hypnosis” you get when you are driving on a long trip and you kind of “zone out” (but, for the record, I’m a good driver – you know what I’m talking about – everyone has done this at some time when driving).
The problem is that when you get lulled into that sense of serenity and security you tend to let your guard down and forget to “scan the ditches”. Then when something unexpected pops up that you didn’t’ see coming, you are forced to react in panic mode.
In most such instances, you manage to avoid the threat through your fast thinking, just plain luck, or a combination of both. It’s usually a combination of both – just like my deer-saving heroics – I zagged and luckily the deer zigged. But if we both zagged – well all I can say is “deer me”).
But even though you have averted a crisis, there is still a legacy left by that incident. You are left with a fight or flight adrenaline hangover – that feeling of lingering stress and worry.
Now if there was only the odd unexpected event (like the odd time a deer jumps in front of my truck) that lingering feeling of stress and worry would dissipate and you would go back to your state of serenity and security.
But when it comes to your business, there isn’t just the “odd” thing jumping out at you, is there?
There are literally hundreds of things that could threaten your outcome (desirable financial results) jumping at you all day, every day, every week, every month.
That means you never really get to recover from those fight or flight feelings of stress and worry. You end up feeling those nagging feelings continually.
Instead of the state of serenity, security, and confidence you find yourself in a perpetual state of worry, doubt, and uncertainty.
You know the doubts that creep into your thoughts – Do you need to spend that money to advertise to get new customers?
Should you really hire that new employee?
What if something unexpected happens and you can’t afford to keep them on?
Can you afford to take that vacation?
What if an unexpected bill rears its ugly head and you are tight on cash because of it?
The list could be endless (but that would be a super-boring post, wouldn’t it?)
The result of this perpetual state of worry, doubt, and uncertainty is that you start burning through emotional and relationship capital at a furious rate.
You burn through emotional capital because it wears you down, and ultimately numbs you to all the good things on which you could focus. You end up a hollow shell of a business owner, zombie-like – just trying to hold on.
And you burn through relationship capital too. Because of the emotional toll your business takes on you, there are spillover effects into your key relationships – friends, family, yourself.
A Better Way…
What’s the alternative?
What’s the better way to run your business?
You should do the same thing I SHOULD HAVE been doing while driving. I should have been carefully scanning the ditches to be alert for any approaching threats – seeing situations develop before they truly became threats.
And that’s exactly what you need to do in your business to slay the damaging emotional damage that otherwise creeps in.
Then you will give yourself “time and space” – to see trouble (or potential trouble) developing before it becomes a major threat. And then you can decide how to react to those developing threats and make corrections or changes to avoid the situation from developing into a true threat.
The most common source of panic in most small businesses is unexpected financial results. These can be unexpected cash drains; poorer than expected revenue generation;, the departure of a key customer; or an aggressive move by a competitor (either existing or new to your market).
Give Yourself Time And Space
So how do you give yourself “time and space” in your business?
The best way to give yourself “time and space” and avoid the Panicked Reactive Mode (PRM) of running your business is to develop a small number of key performance indicators (KPI’s).
KPI’s are specific measures that will provide you with “advance notice” of the financial results your business is about to create.
They are your business equivalent of scanning the ditches while driving.
They let you see trouble way before it becomes trouble. And that means you earn yourself “time and space”. That will allow you to calmly analyze the situation and take the informed actions to correct the situation before it ever does major damage to your financial performance.
Developing KPI’s is often made out to be a difficult task in a lot of business literature. It doesn’t have to be that way, however.
Don’t Get Spooked – This Can Be Very Simple (but oh, so powerful)
So get spooked over the concept of creating a set of KPI’s for yourself.
Just follow these simple steps, based on the approach I use to help business owners identify their KPI’s.
Step One – Make a list of your “Crystal Ball” items
These are the things that, if you had a crystal ball for your business, you would absolutely want to know so you could predict the future financial performance for your business. For example, one thing you may want to know from your Crystal Ball is how many new customers you will be getting each month. Limit your list to a small number to force you to really drill into the key things you would need to know. A list of 3 – 5 Crystal Ball Items generally seems to work best.
Step Two – Identify the precursors for each Crystal Ball Item
The best way I can describe to identify such components is to think of identifying “Crystal Ball Items” for each Crystal Ball Item you identified in the first step. For example, if you wanted to know the how many new customers you would be getting (the Crystal Ball Item in the example from Step 1), you would want to know how many leads you would get each month. And you would also want to know how many of those leads became sales appointments, etc.
Step Three – Select one precursor from Step 2 for each of your Crystal Ball items
You have now identified your initial KPI’s for your business. It wasn’t rocket science, and it was kind of fun (admit it, damnit). When selecting your KPI’s it is best if you can select the precursor that is earliest in the process. Back to our example, selecting number of leads as an initial KPI would prove better than selecting the number of sales appointments (you can always add that one later once you get used to running your business using KPI’s).
Step Four – Measure your current baseline for each of your new KPI’s
This will give you a benchmark against which you can measure changes in your KPI so you can work toward improving it, and also identify negative trends before they become problems.
Step Five – Report and track your KPI’s over time
This is how you will be able to track improvements and move toward creating better financial results. And it is also how you will identify developing threats.
Not A Reason In The World
There isn’t any reason, in the world, for you to not try this. Go ahead and develop your set of 3 – 5 KPI’s. I promise you it can’t make your financial performance worse than it is now. And in all likelihood, it will give you drastically better control over your financial results, and drastically improved financial results too.
More control. Less stress. Improved financial results.
That’s what you can achieve by defining some KPI’s and using them in your business.
If you are still a little puzzled, or just need a kick in the behind to get you going on this, you can request a free half hour consultation with me by going to www.foundmoneymovement.com/consult