I was into my 3rd year growing  Solpak from scratch.  I had a small team of 4 people, including one loyal and dedicated sales rep working on growing our small business. What a relief!  There was a tiny problem though: He was not selling enough to cover his salary.  Was he a bad sales rep?  Should I fire him and find another one? I hated the idea because I liked the guy and knew he worked hard but I needed results.   That’s when I clicked.

I remembered an oft-repeated quote: “You can’t manage what you don’t measure”.  I had all these wonderful business plans and  growth forecasts, but I had hard time assessing how well we were converting our prospects.  That’s when I realized I needed to measure first, worry about planning later.

I put in place a simple tracking system in Smartsheet where my guy would enter all the leads he would get, the potential deals (opportunities) stemming from them, as well as all the sales he actually concluded.  Now this may seem like an obvious thing to do but you would be surprised how this is rarely done in small businesses.  After 2 months of measuring, we had numbers to look back on and forecast with. 1 out of every 2 leads coming to us became a prospect, and 1 out of 3 prospects became recurring clients

Whatever challenge or problem you face in your small business, you have to measure first, plan later. Here are 7 reasons why this is true:

1. You need a baseline to compare results. 

How will you know if you are doing better or worse than before?  The best plans in the world will derail at timesboth with failure and unexpected successes.  Measuring consistently right away will build a historical view on your business and will uncover a story you could not see prior to measuring. We’ve been “logging” our leads, prospects and sales for years now and we can easily know when something has changed from the baseline.

2. Nothing to measure? Nothing to plan.   

If you are not already measuring, how can you plan with confidence? How will you know if your guesstimates are realistic?  Find out what you want to measure now, and what you need to plan will unfold.  What we measure allows us to plan with confidence the upcoming year. We measured for a while, asserted  a baseline, which allows us to plan better.

3. Know where you stand once you start actually changing stuff.   

You have an entrepreneurial mind, you want to change the world, so you constantly change things around you. I get that.  If you want to change “stuff” for the better in your business, you have to know where you stand first.  If I had let go my sales rep without measuring his results, I would not have known how much better, or worse, the next one would have been.

4. Trust your subconscious when figuring out what to measure.  

Yep, your read right. Your experience and knowledge goes deeper than rational thought processes. Trust your instinct on what to measure. The beauty of measuring first is that you can easily adapt along the way.  What you measure today might not matter next year.  At Solpak, we used to measure the number of people we talked to BEFORE they were identified as a lead.  We realized that was overkill.  So we killed that indicator. No big deal.  Once we got bigger clients, we figured we should know how big since they could represent 10 new average clients, so we added the average annual revenue per opportunity.  Measure first, no matter what and adjust along the way

5. Your team members will be more mindful.  

Small business owners often feel they have to think of everything, including what their team members are responsible for.  Having them log their own results will make them more mindful.  As he was starting to log in his leads, prospects and sales, my sales rep became very aware of the result of his efforts.  Funnily enough, he started closing more deals which eventually covered his salary and more.

6. You’ll celebrate faster when gaining grounds.  

This is such an undervalued truth.  A plan will often bring you back to the harsh reality of unfulfilled hopes but progress of what you are measuring will be instant positive feedback.  You’ll be able to “see” your progress easily and celebrate along the way.  I was able to congratulate my sales rep much more often on a day-to-day basis, rather to hound him  on when the next sale would come.

7. You’ll put setbacks into perspective. 

You’ve had hard times with your small business, or will get them sooner than later.  That’s life.  You’ll lose a client to a competitor, you’ll lose a team member, whatever the case maybe and it will affect you.   If you’ve been measuring, you’ll be able to quantify the impact.  It will probably be less damaging than you “thought”.  Numbers don’t lie.  We recently lost a larger client because of pricing.  Great longstanding client whom we had granted over-the-top discounts to keep him. Since we measure profit per client, we realized looking back that we actually lost money  in the past 12 months.  It’s sad to see them go, but in the end will be a good thing to our bottom line.  That setback became less dire.

Your small business entails so many activities, so many facets and yet time is such a rare commodity that measuring indicators is often overlooked, or some cool thing to do sometimes in the future.  You can’t afford NOT to measure, starting this week.  You need a baseline to know where you stand, your team needs to know what results to focus on and feel accountable for what’s measured and plans depend on indicators.

What indicator do you feel you should start measuring now to help your business thrive?

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If you liked this article, maybe you will like Sherpa’s Small Business Method we use at Solpak to stay organized in our efforts.  Download it here for free.