Do you know what the critical number in your business is?
When I say critical number, I mean the number that if it improves or decreases has an impact on pretty much everything else in your business.
I was working with a client last week, and we were putting together their FY21 financial plan and business strategy. As we were unpacking their projects, I asked “If we can only focus on one metric, one key metric, what would that metric be?” And in his business, he had created what we call a staff efficiency index. It’s a service-based business, and we determined that for the business to be profitable as well as for the staff to maintain balance, that 66% of their time needed to be billed time.
As we were working through this, we realized that from a planning perspective, if the efficiency index was at 66% or greater, everything else in the business was taken care of. Revenue targets were being hit, profit targets were being hit, cash flow targets were being hit.
And my belief is that every business has a critical number.
Now there’s many, many metrics that you can measure in your business, but the question becomes what’s that one number that everybody in the organization can understand, that everybody can have access to, that if it improves, has improvement on everything else in your business.
You want to really think about this. It’s not hard. It’s often the most obvious number. But everyone needs to be focusing on it. That’s the score. That’s how you win the game in your business. Improve the metric around your critical number.
If you want some help identifying your critical number, just reach out. We’re happy to help. And we’ll provide some examples of critical numbers over the next few weeks. But ask yourself, what’s that one number that if you just focused on that, would improve everything else in the business and help you reach your goals?