Back To Top

Blog

Do You Know Your Critical Numbers?

Do You Know Your Critical Numbers? Do You Know Your Critical Numbers?
If we asked you what metrics you consider important for your business, what would you say? Most business owners would likely list things like revenue, expenses, and product/unit sales, but there are many more numbers and metrics that are critical to the success of your business both in the long and short term.

 
DEFINING SUCCESS
The first step to uncovering your business' critical numbers is to determine how your company defines success, which goes a lot deeper than just your bottom line. There are many ways in which success can be attained and measured within your organization, and it can be helpful to consider what success looks like for you within the following categories:
  • Growth and Momentum
  • Personal Development
  • Life Balance and Purpose
  • Values Alignment
  • Future Success
For example, a measure of success could be that your business affords you the ability to maintain a flexible schedule (Life Balance and Purpose), or that your revenue grows each year (Growth and Momentum), or that you are able to pass along the business to a future generation of your family (Future Success). Establishing your measures of success early in your business can help provide you with a clear foundation that you can use as the basis for your quarterly or annual planning process. Reviewing (and revising!) your business success measures at regular intervals can also give you the opportunity to ask yourself if you are still working towards them and/or if they are still meaningful for the business to ensure that you are always actively engaged in a process of development. Reviewing them also gives you an opportunity to identify wins to celebrate and areas for improvement so that you can adjust your resource allocation as necessary as you grow.
 
 
DEFINING YOUR CRITICAL NUMBERS
Once you have created a list of all of your measures of success, take each measure and add a specific metric to it that can be tracked with data (which can be relational, diagnostic, qualitative, quantitative, etc). Success is most meaningful when it can be measured, so make sure to get specific and realistic about your goals - and keep in mind that you always have to ability to revise them as your business develops. There may also be multiple metrics you want to track for certain measures of success depending on your goals and how your business operates, which may include both postitive and negative values. Here's what that some critical numbers could look like for the success measure mentioned above:
 

The ability to maintain a flexible schedule (Life Balance and Purpose)

  • ​"I have the ability to maintain a schedule that allows me to go to the gym in the afternoon 3 days per week"
  • "I leave the office by noon every Friday and take the afternoon off"
  • "I can take time off of work to chaperone 2 field trips at my child's school per year"

The company revenue grows each year (Growth and Momentum)

  • "The company revenue grows at 3% year-over-year for the first 5 years"
  • "We decrease the company churn rate to 1% by the end of the year"

Succession Planning includes passing along the business to a future generation of my family (Future Success)

  • "I will create a succession plan in writing that details my goals for the company before I turn age 50"
  • "I will have 1 conversation a year with the person who I intend to pass the company onto to ensure we are still aligned with our vision for the future"
 
Most importantly, keep in mind that one of the benefits of business ownership is the ability to build a business that accomplishes what matters most to you. Your values and priorities set the stage for the future success of your business, so taking the time to hone in how to tangibly measure that success using your critical numbers will give you a more actionable plan for growth. 
Want to see how
BarterPay Niagara
can work for you?