3 Simple Things Every Budding Company Should Measure
My rule of thumb for what to measure is that if it is important enough for you to be doing, it’s important enough to be able to measure performance around it. Obviously doing is more important than measuring, but often times it is easy to do things in a way that can be measurable down the road. One of the pieces of advice for start-ups time and again is to make sure their financial books are in order. It sounds like a no-brianer, but the fact that we need to be reminded shows how easy it is to tunnel vision on the task at hand and forget why we started in the first place.
A 1-2 person company just getting started often feels there is nothing of value to measure yet, that measuring performance is just a waste of time. Nonsense. Even someone just fleshing out an idea in the evenings after their day job should be measuring how many hours per week they are spending on their “second job”. As they talk with people (potential customers or not) to investigate whether or not there is a need for their product, they should note down the names of the people they speak with, the date they spoke with them, and a sentence on what was learned from the conversation. After a few months, they should be able to measure how many people they’ve spoken with and what they learned from it.
Top 3 Metrics
This article is a great reference for key performance metrics for established companies or start-ups just transitioning to revenue or funded business models. However long before this, my top 3 things a budding company should be measuring are: 1) Valuable Contacts, 2) Time Spent, 3) Money Spent.
Photos by: Jacek Dylag, Lukas Blazek, Sharon McCutcheon
- Valuable Contacts: Have a repository documenting the name, email address, last contact date, and notes on the valuable contacts made while growing the business. These could be potential customers validating the product, industry experts that have provided valuable input, mentors that have provided feedback on the business model, and more.
- Time Spent: Depending on where the start-up is, loosely or strictly keep track of time spent on the company. Early on, generally understanding how much time each contributor is spending is enough. An easy way to do this is for every person to estimate how many hours per week they spent on the company in the month prior. Older companies working with clients to provide products or services need to strictly measure how much time is being spent with different customers.
- Money Spent: This does not have to be granular early on, however it is important to know how much money everyone on the team is spending on at least a monthly basis. On a shoestring budget, important purchases aren’t made or are delayed due to not understanding financing just as often as overspending. Even informally, have everyone estimate how much they spent on the company the month prior and log it. Once a company account is opened, it will be much easier to measure expenses.
Why These 3 Metrics are Worth It
I know these three metrics sound like a no-brainer list, but they are so easily overlooked in the moment and are valuable to know starting from day one. On top of that, these three metrics (contacts, time, expenses) are very easy to measure in the moment, and very difficult to estimate in hindsight. Despite being so easy, this information will be valuable down the road as the company inevitably has to make difficult decisions around issues like cofounder contributions, when to take investment funding, whether or not to add team members, and more. These three simple measurements are not to be confused with what the core of the company is: the unique value proposition, what problem is being solved, and what the solution can provide. The company’s core will always be the most important time spent, however the three simple metrics I discussed are easy to track and assist greatly with the logistics and decision making needed to run a company.
If you are founder, small-business owner, or have a similar life dominating project, I’d love to hear your thoughts on the usefulness of these three metrics. Please do leave a comment or feel free to connect with me directly on LinkedIn or Twitter. If you’d like to continue seeing my blogs on innovation, business development, and our community, subscribe to my blog on the right. Thanks for reading!
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