After working with hundreds of Entrepreneurs over the years I have determined that the Entrepreneurs that can boil their business down to one number that they track usually achieve amazing results.
They find over time that their bottom line number is a direct correlation to some operational indicator. For a restauranteur the number of meals served. For a manufacturer the number of scrap bins filled. Technology and media developers track billable hours.
Usually this operational number provides an Entrepreneur with a close approximation to net income long before their accountant presents a report.
This is certainly not to minimize the need for solid accounting practices. It promotes them. Consistent and best practices accounting aligns itself with operational metrics. By balancing operational tracking with financial reporting the management team develops an insightful and educated “gut feel” approach to business.
Operational metrics can also be a rallying point and team building goal for any organization.
Certainly we do not suggest that additional operational numbers are not meaningful. We how however recommend that less can mean more.
Challenge your financial and operational team to find their “one number.” Also, challenge the team on a regular basis to analyze financial derivations from the tracked operational indicator(s).
This simple concept will often lead to very productive internal discussions and a team building process that leads to efficiency, quality control, and a dedication to a customer centric service business.
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