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Sunday, April 29, 2018

Is Your Business Loosing Money? It Might be in the Metrics!

Businesses can't know where they are going unless they know where they currently are. While it can be beneficial to simply use your gut feeling to run a business there comes a point when your establishment may simply be too large to manage without proper metrics. We are moving into an era where data is important and not having the right kind of data could be a big issue.

Consider a company that doesn't understand the performance of their individual departments. There has always been, and will continue to be, performance metrics but these performance metrics must be updated to create an accurate reflection of performance. Without such metrics it can be difficult to make all types of changes and adjustments.

On one level you don't know how well you are functioning and what the potential of the department is. This means you would have a difficult time making long term strategic decisions that will better align to the market and ensure that your company continues to stay profitable. The metrics will let you know where you can what you currently do well, where you are not doing well, and where you need to improve.

Metrics can also be used to see what problems are coming down the road. For example, if you are falling behind in the ability to process orders you may need to update your processes and technology. Without metrics you wouldn't know which one to invest in and how much it will likely improve your business.

Not all metrics are the same and some won't measure what you actually need them to measure. It is important to have a solid grasp of your strategies and start implementing those metrics that are likely to help you understand how well you are moving toward fulfilling those strategic goals. One of the problems companies face is outdated, useless, time consuming metrics that have nothing to do with their goals.

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