How Do You Know If You’re Business Is Doing Great?
As a business coach, I’d ask, “How’s Business.”
The standard answer, “Great!”
Then the deeper question, “How do you know?’
“Because our revenue is up 10% and we’re turning a profit.”
Me: “Well that’s great if your business was a top performer against peers last year, but what if you sucked? What if you still suck? How would you know?”
If the market grew 20% and you’re company grew 10% some CEO out there is delighted you let her have your other 10%.
There’s an old adage, “You can’t improve what you don’t measure,” so it’s good that you’re measuring against something… yourself. But are you measuring the right somethings? Are you grading against a substantially handicapped curve… you, or are you grading the difference between Sumo and Magna Cum Latte (this time it’s intentional, spelling Nazis)?
When the top High Jump height in Maryland & Virginia High Schools was 6 foot, 2 inches. That’s a fantastic achievement and congratulations to the 6 jumpers who reached that height. But don’t get too excited yet and start packing your bags for the Olympics.
In the same year, 28 high schoolers in California eclipsed the best Virginia and Maryland jumpers by 6 inches or more. Including 1 young man who jumped 7 feet.
In sports and in business it’s great to improve and compete against your personal best. Yet comparing yourself to your peers will tell you if you’re achieving grade school level performance or world domination levels (by the way the world record in the high jump is 8 feet ¼ inches).
One of my coaching clients advantage from my other clients because he was part of a franchise. The franchise supplied him with metrics and the ability to measure his performance against a large sample of his peers. The peer data demonstrated to me and my other clients the value of peer group comparisons. His goal was not just to beat last year’s numbers but to always be in the top 10 percentile of his peers. He truly knew if he was performing.
Having peer statistics to compare against your metrics allows you to understand if you are a well-oiled Ferrari or a broken-down Karmann-Ghia. Figure out how you can get peer data. Is there an industry association that may have the relevant statistic or at least compares to economic data, GDP, inflation, gas prices, the price of tea in China…. Something that tells you that you are not just doing better than last year but that you’re killing it or just on life support.
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