Type “winners keep score” into google and you’ll quickly get more than 85M results.
In our line of work, we have the benefit of seeing the performance across many businesses. And there is one thing that is true time and time again. The best performing firms keep score.
What does that mean for creative firms?
It means that successful firms have a system in place to track their financial performance among other important indicators of success. Things like profit per employee, growth rates for revenue and profit, and working capital are closely monitored and there is clear accountability for who owns these metrics.
In addition to tracking these metrics, they also track the things that influence them, things like:
- Top source of Inbound Leads;
- Content generated, website traffic, and email list growth;
- PR mentions, awards entered, and awards won; and
- Client compliments and client complaints
- Client success tracking. For example, out of ten prospective new clients, how many invited me in for a conversation? How many of those conversations resulted in a proposal? How many of those proposals resulted in a paid opportunity?
These are just a few metrics worth tracking. Take the time to identify the right metrics for your firm and establish a cadence around reporting on them. The most successful firms also establish a clear accountability framework for these metrics and task an individual to be responsible for the outcome.
At the end of the day, what gets measured gets done.
The Importance of Financial Metrics
We all know that the numbers matter. Why else do we keep endless spreadsheets of data tracking everything from our weekly sales to our monthly budget?
But why does everyone in your creative business need to have a number to help your growing business succeed?
Here are four reasons why everyone should have a number and why your firm needs them too:
Numbers provide clarity and remove subjectivity. Instead of sales were “great” this quarter, how about we make it tangible and say we exceeded our $500k target by 10%.
Numbers reinforce a culture of accountability. Expectations are clear when you know precisely what your targets are. Inherently accountable employees are not afraid of clear expectations. This is true with even the most creative folk. It ensures that everyone is in one boat rowing in the same direction.
In high performing firms, transparency around the numbers is critical. This is typically accomplished through a scorecard. We prefer to ensure that scorecards are proactive activity based tools that track and measure success on a semi-monthly basis. Scorecards allow you to identify patterns in the results and pivot in real time.
Scorecards are a blog unto themselves – more on this to come!
4. Decision Making
While numbers aren’t everything, and things like great culture and producing great quality work is also extremely important to your business’s success, numbers should guide your decision making. This is true for both revenue decisions and investment decisions. What gets measured is generally what gets done. If it isn’t going to positively impact one of your KPI’s, then it probably shouldn’t be something you spend time or money on. Numbers create clarity and get all resources focused on shared outcomes.
At FIN/ALLY we know the numbers matter. Establishing the most important KPI’s is one of the first things we’ll work on together and we’ll ensure we’ll regularly report on performance against these. Set yourself up for success, let us work with you to establish meaningful numbers for everyone on your team so you can focus on what matters most to you – growing your business! Let our team at FIN/ALLY help your firm keep score by providing your management team with the most relevant metrics around your financial performance.