CHAPTER TWENTY-THREE:
Metrics
633 Days Inside by Greg Lindberg
CHAPTER TWENTY-THREE:
Metrics
Randy Nelson talks about metrics, and we know how to easily measure some of them. But, how do you capture metrics for leading indicators? Turns out, it is not all that different from collecting information for lagging indicators.
To obtain your metrics, you need to—
- Collect the data;
- Input the data into a spreadsheet;
- Convert the numbers to percentages;
- Data sort the numbers and percentages;
- Analyze the trends; and
- Make decisions regarding current and future targets.
…revenue is vanity, margin is sanity, cash is reality.
In this model, as in life, it is wise to remember that “revenue is vanity, margin is sanity, cash is reality,” according to Nelson.
From your metrics, you need to create a one-page decision sheet that includes five years of history, expenses as a percentage of revenue, with input from your income statements. On the same page is your target for this fiscal year. Then one year and three years from today.