I’ve recently increased my efforts to lose weight. Having a holiday coming up has certainly helped with the motivation. I’ve been saying for months I need to lose weight but the urgency wasn’t there. Now, with a month to go, probably far too late, I’m starting to do something about it.
The first thing I did was to start taking measurements. The gym I go to has a machine that scans your body and then provides readings for weight, muscle mass, fat mass, etc. Great! All interesting stuff but my main focus was on the weight loss.
I proceeded to go for morning runs (3 or 4 a week), visit the gym to do some strength training, had the odd swim and tried to eat better. I also reduced my alcohol intake.
2 weeks later, jumped on the body scanner…. I’d put on weight!!
What a load of expletives! Why bother with all that effort?
Well…. The important thing here is that, yes, I had put on weight, but because the body scanner took more measurements of different things, such as fat and muscle mass, I was able to see that I had lost fat and put muscle on. I had put on more muscle mass than the fat mass lost, which is why my weight had increased.
Now… this put me in a much better mood. I’ll be ripped in no time!! Just got to keep going. Persevere!
Why is this all relevant?
The key take aways here are that:
- I thought I knew what my goal was but it turned out I didn’t. I thought it was to lose weight, but instead it was to get into shape. Lose fat, gain muscle.
- You don’t know how close to, or far away from, your goal you are unless you measure your progress.
- I was only able to see progress by measuring several different KPIs. One alone didn’t give me the true picture.
- I didn’t know what the useful KPIs were until the machine showed me.
From a business perspective, it’s much the same.
- The business goal for many of my clients is to earn more money. This is great. However, will they ever achieve it or will they just always want more? Perhaps a better goal would be to earn £X, so that you have enough to cover all outgoings, pay for 3 really nice holidays each year and have money left over to buy what you want, when you want. If you can put a value on that, it makes it far more real and meaningful.
- Many business owners don’t measure their progress. Even if they know their goal, which they often don’t, they don’t know how they are performing in relation to that business goal. Regular management accounts will keep you on track, allowing you to see how you are performing each month, in real time.
- Don’t just measure one thing. For example, you might be tempted to measure your net profit (bottom line). More profit means more success, right? What if earning that profit meant that you were working more hours than there were in the day. The hours you were working meant you couldn’t ever take a holiday even if you were earning the money. Perhaps you could also measure the number of hours you are working each month too, and work on reducing it.
- Your accountant will have worked with many businesses and should provide a great insight into what KPIs you should keep track of to ensure you are on track to hitting your goals. There are so many things you could track. Not just financial but, like the above example, could be hours worked, number of days you took the kids to school, had dinner with the family, etc.
To summarise then, if you want to grow your business, you need to set yourself meaningful a business goal. You need to monitor your progress towards achieving those goals, you need to understand what you should be monitoring and you need an amazing accountant in your corner, helping you every step of the way.
Can Kilby Fox help?
If you’d like to understand how we can help you grow your business and achieve your goals, please get in touch.
Just call on 01604 662670 or email firstname.lastname@example.org
Martin Crooke is a Partner at Kilby Fox Chartered Accountants in Northampton. Martin specialises in helping small business owners gain financial control of their lives so they can focus on what they do best. He has been doing this for over 16 years.