Measure up or else!

Written By Redlands Coast Chamber

Aside from tragedy and loss associated with an aircraft crash the most vital piece of equipment to be retrieved is the aircraft flight data recorder. The early version “black box” used film to record data showing fuel, attitude, speed and other basic measurements. Data recorders today have the computer capacity to log all the vital performance and functions of the aircrafts’  systems. This data is a snapshot of all the measurements and setting that were in place during flight and pre impact.

Every business should operate with its own version of an in-flight recorder. Here is a killer question, What measurements are in place for your business operation. Aside, from the basic data from a sales transaction, bank statement, debtors and creditors figures, what measurements and data does your business utilize .

The maxim is clear, ‘if you fail to measure, you fail to manage’, meaning how can you plan and make critical decisions for your business if you don’t capture and use all the relevant data regarding the current activities, performance and results.

If business failed to measure sales and expenses how would you determine a break-even figure, the amount of sales required before a profit was achieved. Let me give you an example, if your sales mark-up was 50% on cost items and your weekly expenses were $1000, the break-even for the week is $3,300. From this data business sales can be managed to achieve the required results. Measurements can be made on all areas of business, including productivity and marketing.

Let’s look at a marketing example. If your advertising was driving say 121 customers into you shop each week and the sales figures only recorded 9 sales would you spend more money and change the marketing. The short answer is no. The measurements show there is a conversion problem. Money would be better invested in your staff with sales training or customer service skills.

Business success and replicated profits are more likely with sound management. Effective management is possible when the data from the business systems has been collected and analysed to ensure planning and business decisions are non reactionary and congruent to the owners’ and the businesses objectives.

Rod Richards  (AIPFM) BSB07 TAA04  Business Consultant

Contact First Business Solutions P/L  www.contactfirst.com.au