I’m reading a very entertaining business autobiography at the moment about the founder of Iceland (yes the supermarket): Best Served Cold by Malcolm Walker.
The chain started in the early 1970s, and they were one of the first supermarkets to track the weekly profit of each store.
Malcolm Walker writes that they kept a massive journal full of the key weekly figures (the 1970s equivalent of Excel). Sometimes they got behind updating the information, so they let it slide for a few weeks till the next quarter’s accounting info was due.
And every time this happened, they realised they had allowed problems to proliferate in the business. Problems that they would have spotted had they kept their weekly journal up-to-date.
Classic management thinker and author Peter Drucker is often quoted as saying that "you can't manage what you can't measure."
My experience of most small IT support businesses is that information isn’t measured on a regular basis, and that means obvious clues are missed.
My goal here is not to add to your burden of work. But instead to get you into the habit of tracking a small handful of the most important pieces of data in your business. To give you a powerful insight into what’s actually happening in the business.
Perhaps you’ll do this with a shared spreadsheet. Perhaps you’ll use a service like The Dash.
Perhaps you’ll use the reporting in your existing monitoring tools, or accounting software. Perhaps you’ll call these KPIs and make them a big deal for your management team.
Perhaps you’ll just spend 10 minutes at the end of each day poking into some figures.
How you do it doesn’t matter. So long as you get into the habit of checking progress and performance at least weekly. Ideally, daily.
There are only really 3 sets of information you need to track.
This is the most important information. Businesses thrive or die based on cash flow, not profits.
Back when I ran my big marketing business, I got quite obsessive about tracking cash in and out.
It feels really old fashioned when you think of the tools available, but after a massive cash flow scare one Christmas, I would obsessively log all money in and out in a massive Excel spreadsheet.
This was private to me and separate to my Sage / Xero, which was used by my bookkeeper.
Yes it meant 10 minutes interrogating the bank account every day. But I knew what every penny was being spent on in the business (much to the annoyance of my staff, who realised I would demand justification for every cost).
It also meant that when we started making good money, I knew exactly how much was available for me to take out, and how much I had to leave in for the vat bill, corporation tax, a month’s safety money etc etc.
You should track these items daily or weekly:
- Cash in
- Cash out
- Monthly profit
- Vat due
- Money available for you (the purpose of the business is to make you a living, after all)
What drives money is marketing and sales. Another important point learned by Iceland in the early days - it was all about sales. They literally grew that business by watching closely what customers wanted and giving it to them.
When the business lost its way, it was because it lost its focus on sales and marketing. When the initiatives returned, so did momentum.
There are some figures you really don’t need to track. Some marketing consultants will disagree with me on this. For example, web traffic. It really doesn’t matter how much or how little web traffic you get. What’s more important is the outcomes that traffic generates.
For new clients, you should track:
- Amount spent on lead generation
- Number of new leads generated
- Number of sales appointments booked, and actually performed
- Number of new clients
- Amount of new revenue
- Cost of each new £ generated (i.e. spend £1 to generate £10 of new revenue)
- Conversion rates throughout your sales funnel
I tracked these religiously in my marketing business. It’s how I knew a telesales or field sales person was going bad, because I watched their conversion rate dip.
Actually, in once instance, I realised a telesales guy was mugging me off, because his conversion rate every day was identical.
For existing clients, you should track:
- Number of Strategic IT Reviews (aka retention meetings)
- Amount of upsell revenue
- Number of clients cancelled
Customer happiness / quality of service
This is the area you will find the easiest to track. Because the data should be sat in a system somewhere:
- Number of tickets raised
- Number of tickets raised per user. Maybe per client too (to identify the nightmare clients)
- Average ticket open time
- Average open ticket time per technician
Staff have the tendency to increase the work to match the time available. By tracking an overview of the work that’s being done, you can start to form an idea of just how much capacity each technician has.
The more users you can take on per existing technician, without reducing quality of the work being done, the more profitable your business will be.