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Measuring and Monitoring - Why Bother

Bridget Holmstrom - Sunday, March 15, 2015

Measuring and monitoring your business - why bother

As a small business owner it can often feel that you have more than sufficient work without adding any more tasks.  However it is important to remember that if you don't check to see what is happening and how fruitful your activities are in generating and delivering business then how can you know whether all the work you do is adding value to your business - or just a complete waste of time and money.

Then why should you measure and monitor your activities.  Because what you monitor you can measure and what you measure you can manage.  And if you can manage something then you can control and make intelligent decisions.  You can confirm that your energy and resources are being allocated to the right strategies and that your customers are delivering the profitability (and cash) that you expect.  If you don't monitor and measure then how can you know what is happening, where you are going and whether you are going, even if only by accident, in the right direction.

So what should you manage:

First of all cash - cash is king - and you should know what your cash is doing at all times.  How much do you have, how much is going out and when and how much is coming in and when.  Failing to check your cash can quickly lead to business failure.  Not understanding what influences cash and how can result, quickly, in running out of the stuff.

There are many different influences on cash but perhaps the key ones are revenues and costs and how quickly you pay your suppliers and of course how quickly your customers pay you. 

Revenues

Monitoring and measuring your sales, volume and prices will help to identify which product or service produces the most value and, of course, which customers are your most productive and valuable.  Just because you sell the most to a specific customer, or group of customers, it does not necessarily mean that they are delivering the right level of profit. 

Costs

Of course managing costs is probably the element over which we, as small businesses, have the most control.  There are any number of different types of costs but probably they can be split into those that we have to pay and those that we can choose to pay.   As small business owners we should ensure that we include ourselves in the costs that we have to pay.  Whilst we intuitively know that large costs are those that we should focus on controlling we should never forget that small costs add up to large costs very quickly and can erode our profits and steal our cash very quickly.

Finally measuring and monitoring is essential but as with all things we need to measure and monitoring the right things.

Get a better insight at a free seminar to be held on the 28th April at the Multi Media Centre, Corporation Road, Middlesbrough.

Contact Bridget for more information