“Can you imagine a football game where they don’t keep score? That’s what most businesses are,” Chuck Richards, CEO of CoreValue Software says. Running a business can be like playing a game with no scoreboard.
Marcus DiNitto, the Contributing Writer for an article published by The Business Journals in June 2017, interviewed Richards who identified three smart ways that increase value by fixing operational elements of an organization. Click on this link to read the full article and download a free assessment tool.
The Market, The Processes, The Metrics
According to CoreValue, nine out of 10 business owners who complete the assessment program (see free assessment tool) do a poor job documenting their market. Why is this important? It enables the business with internal communications so every employee is on the same page. If borrowing funds or selling the business, the information shared externally is key to the outsider(s)’ financing or purchase decisions.
When goods and services are sold, the business promises to deliver to the customer what they purchased. There should be documented processes in place to ensure this delivery of goods and services. Every business should have a back-up plan so that operations are not reliant on any one individual, particularly solely reliant on the owner.
“A business owner has an obligation to make sure employees understand the company’s goals and objectives and how they are helping the company reach those goals and objectives. Rarely do companies have effective metrics of performance,” Richards said. “…employees almost never know if they are winning or they’re losing at work, so they tend to keep busy. But it’s not very productive; it’s not very targeted.”
Knowing the company’s goals and metrics for success makes the work more fun, not only for the owner but also for the staff.
Big Hairy Goals
Remembering when I first started working at a large national bank, we had lots of meetings – meetings about new loans in the pipeline, new employees and organizational changes, and the bank’s financial benchmarks. At the time the bank’s Return on Equity (ROE) was roughly 6%. Return on Equity is calculated as Net Income divided by Net Worth. I distinctly remember one meeting when a new CEO and Board Chairman had been chosen. He came right out of the chute and said our five-year target for ROE was 21%. Yowsa! (We thought he was crazy.)
Five years later we were right at 22% ROE, having exceeded our goal. What an exhilarating feeling it was to work as a team and make good things happen.
Think about your business as if you were playing football. What are the plays to make the next first down? Does your staff know what the plays are and how to score? For more information on how to fix operations and set metrics, contact Nita Black at (901)413-1315 or go to her website at www.NitaBlack.com. You can also find Nita on Facebook, LinkedIn, and Google+.
Plan for success!