5 Litmus Tests Your Business is on Track for 2013
By Mark Wardell @MarkWardell | January 1, 2013
It's that time of year again. Assessment time! The time when you look back at the goals you set for 2012 and assess which you achieved, which you exceeded and which you have yet to conquer.
When you’re running a business, it’s difficult to find time to assess goals on a regular basis, but nothing could be more essential. To get you off to the right start in 2013, here are five litmus tests to help you evaluate whether your business in on the right track in five essential areas.
- Leadership. When it comes to your leadership team, the most poignant question to ask is this: Is your Leadership leading? The best way to know if you have some true leaders running your business (alongside you) is by analyzing their ideas. Our litmus test for Leadership? You should expect one great idea per month coming forward from a team member or manager….not counting your own ideas!
- Sales. Your goal is sales growth you can see, measure and forecast over the coming year. Our litmus test for sales performance is your market share. Has your customer count increased each month, compared with the same month the previous year? Your "sales per customer" is an important number as well, but if you have a growing list of happy loyal customers, sales growth won’t be far behind.
- Company Morale/Retention. When company morale is down, you can feel it. When the typical office banter stops, that’s a major indication that something is amiss. If you are feeling disconnected from your team, check in with your social experts (the influencers within your organization - not necessarily management) to learn what the mood of the team is like. They’ll be able to let you know if it has changed and can help you come up with a plan to set things right.
- Public profile. Is your public profile getting stronger and more visible? The litmus test here will depend on the size/nature of your company but we suggest you should be seeing at least one positive mention per month. You can amp the positive stories yourself through blogs, press releases, and social media.
- Production/Operations. How can you evaluate whether your company is running efficiently? Two words: weekly reports. Weekly reports reflect that management is meeting often to work toward the pre determined KPI’s (Key Performance Indicators). This litmus test should reveal that your company’s operations are becoming healthier and stronger. If indeed your company is on the right track, you’ll be climbing what I call, The Value Pyramid.
In a nutshell, The Value Pyramid, pictured in the attached photo, depicts the stages a business climbs as it matures into a self-sustaining, valuable enterprise. What does The Value Pyramid represent? It's a process. The more a business is driven by its systems, people, and the resulting culture, the less it relies on the owner for its value, and the more valuable and saleable it becomes.
Ultimately, the litmus tests we're talking about here are key indicators of the overall value of your business, which has much to do with the culture that emerges as systems take root and your enterprise begins to runs on its own.
An example of a great culture-driven business is Netflix. They claim to have no vacation policy, a 'non-policy' that was driven by employees themselves who said, "We don’t track our hours in the day, or our days worked in the week, so why do we track our vacation days?" It may not be the right policy for every business, but it certainly seems to work for them.
If you don’t see staff bringing their own initiatives, ideas, drive and dedication to your business, you probably haven’t arrived at the top of the Value Pyramid… just yet! But keep at it and you’ll get there soon enough.