Know Your Numbers: Where to Start When You're Tracking Nothing

Last year I sat in a breakout session at a convention, and the speaker started firing questions at the room. Not rhetorical ones. Real ones, the kind you are supposed to be able to answer out loud if somebody calls on you.

What is your current revenue? What systems do you have in place that let the business operate without you? How many leads are you getting a month? Where are your leads coming from? What is your lead to job conversion rate? What is your average ticket on the jobs you are running?

I was sitting there with my pen, and somewhere around the third question I realized I had a problem. I could not answer most of them. Not for Cavalry, not for Highland, not for Outcome Academy. I could have given you a ballpark on revenue and I could have told you we were busy. That was about it.

That was really embarrassing for me, and I want to be honest about it, because I think a lot of people feel like they are the only one. I have a Black Belt in Lean Six Sigma. I spent ten of the last eleven years as a quality manager in a hospital laboratory, where I was in charge of all the KPIs. I helped every team member in that lab figure out what to measure, how to measure it, and how to report on it every month. And I still could not tell you our own average ticket.

But the embarrassment turned out to be a gift. It only happened because I was in a room where nobody knew me and nobody was grading me. That is the real value of going to a conference in an industry adjacent to yours instead of the one where everybody already knows your name. You get to be a beginner again, and beginners find their gaps.

Why Most Owners Skip This

I don't think business owners avoid their numbers because they're lazy. I know that isn't it, because I wasn't being lazy. I just wasn't focused on our numbers, because of all the other things I had to worry about.

The truth is that most owners are running the business off their bank balance. Is there money in the account? Then we must be okay. Is it looking low? Then we must be in trouble, better go sell something. That is the entire measurement system, and notice how reactive it is. You are always finding out after the fact.

Revenue is the number almost everybody knows, and it is the loudest one, and by itself it tells you almost nothing. Revenue tells you that something happened. It does not tell you why it happened, which means it cannot tell you what to do next. Here is a news flash: you can have your best revenue month ever and still be losing money on every single job. That happens more than people think.

Then there is the second reason, which nobody really wants to say out loud. Sometimes you avoid your numbers because you're afraid of what they'll say. You have a suspicion about the profit on a certain type of job, or about somebody on your team, or about how much you really spent on marketing last year. But...as long as you don't look, it's not confirmed. 

But the biggest reason is overwhelm. You go looking for what to track, you find a list of a hundred metrics, they all sound important, and you have no idea which ones matter for a business your size right now. So you close the laptop and go answer the phone, because the phone is at least a problem you know how to solve. Sound familiar?

One of the first principles I learned in process improvement is that you can't improve what you don't measure. Here's the second half almost nobody talks about. You also can't measure every single thing at once. Not when you're the owner, the estimator, the dispatcher, and the person who takes the trash out on Thursday.

So the question isn't whether to track your numbers. The question is which ones, and in what order.

The Tracking Pillar

In the Outcome Academy Business Mountain Framework™ we created and teach, everything lives in one of three pillars. Team is your people. Trajectory is where you're going and how you're getting there. Tracking is your instrument panel, or in quality language, your quality management system.

Think about a real mountain climb. Nobody standing at 22,000 feet guesses their altitude based on how tired their legs feel. They carry an altimeter, a GPS, and a weather radio, and they check them on a regular basis. Not when they get nervous. Not when they're already in trouble. In advance, because they want to know what's happening before they're in trouble.

The instruments aren't there to make the climb harder. They're there so you can make a decision before a decision makes itself for you (because we all know that isn't good!).

The Tracking pillar breaks into five categories:

• Financial,
• Marketing,
• Efficiency of operations,
• Customer satisfaction, and
• Team and HR.

Pick one or two numbers from each. Five to ten numbers total, looked at once a month, on a single page. If that feels like too much, pick one from a few categories and start there. You don't need a flashy dashboard or expensive software. Just start with one page.

Where to Start in Each Category

Financial. Start with gross revenue by month, not as one annual blur, because the shape of your year is information. Then add average dollar per call. Take the month's revenue, divide by the number of jobs. That's the whole calculation.

This one's my favorite because it's the cheapest lever you have. Say you run 100 jobs a month at $280. That's a $28,000 month. Get that average to $310 and the same 100 jobs produce $31,000. Same team, no new marketing, no new customers, no new trucks. That's $3,000 more a month and $36,000 more a year. When owners want more money, they immediately go looking for more customers. More customers is the expensive answer. Once those two are running, add net profit, because revenue is what you sold and net profit is what you kept. Another good one is Cost of Doing Business.  There are a TON of complex ways to calculate this, but we like to keep it as simple as the dollars per call: Total expenses divided by the # of total jobs= how much is costs you to show up for a customer. Lower that and you also keep more money!

Marketing. Lead count and lead source, and they go together. Lead source is something we've tracked at Cavalry from the very beginning, and it's as simple as asking where somebody heard about us. I know the objection, because it's always the same one. We're slammed, nobody has time to ask and write it down. Just make it a required field on your intake form or a column in a spreadsheet, and it takes about four seconds per call. Ninety days of that will tell you more about where to spend your money than any marketing consultant can, because right now you might be paying for a source that isn't bringing you customers, and you might have a source quietly bringing in your best ones that you aren't feeding at all.

Efficiency of operations. Start with incoming calls versus jobs scheduled. If 100 people called and 62 landed on the schedule, your booking rate is 62 percent. If your leads are strong but your booking rate is low, your problem isn't marketing. Your problem is what happens on the phone. More leads into a leaky front desk is just a more expensive version of the same problem. After that, add first call complete, the percentage of jobs finished on the first visit without going back for a part (or more information, if you're in the business of providing knowledge). Every return trip is windshield time you don't get paid for.

Customer satisfaction. Start with recall rate, meaning callbacks and redos you fix on your own time and your own money. Nobody wants to track this one, and it tells you the most. Logan built a recall tracker for Cavalry Appliance, logging who touched the appliance first, what the problem was, what type it was, and what brand. The pattern that showed up was refrigerators, so last week our technician was away at sealed system training. It was never that he's lazy or doesn't want to do a good job. It was a gap in knowledge, and gaps in knowledge are fixable once you can see them. Second, count five-star reviews per month, not lifetime. Why? Because a business with 340 reviews and none in the last five months is telling you something, and it isn't the same thing the 340 is telling you.

Team and HR. Examine turnover once a year, looking at the real cost and not just the count, because losing a good service provider costs you recruiting, ramp up, training, uniforms, and sometimes the customers who liked that person. Then lates and absences monthly, because people check out long before they quit, and attendance is usually the first thing to slip. Track it and you get a conversation. Don't track it and you could get a resignation letter and a look of surprise.

Don't Add Fifteen Things Because of this Blog Post!

If you're at Base Camp or Camp 1, that short list isn't a starter set. It's the whole job. Get a few in place, look at them every month for a quarter, see what they tell you, then pick the next big thing and add it on. Building a good quality program is a process.

At Camp 2, when those are running without you thinking about it, layer in customer acquisition cost, average collection period, email list size and open rate, and productive days per tech. By Camp 3 and 4, the shift isn't more numbers. It's layering objectives and key results on top of your key process indicators, with your leaders owning their own numbers instead of you chasing them down.

TIP: Write down how you get each number so you get it the same way every time. We used to calculate recall rate by reviewing every call during payroll by hand, which was exhausting and wasn't sustainable. Now I pull a report from ServiceWorks (the software we use to manage all our customer's appliance related info, repair notes, etc.), sort by client name in Excel, and see which job was a recall and who ran the call before it. Same process every month, so we're comparing apples to apples.

Your Numbers Are a Map

Your numbers aren't a report card. They aren't a reflection on you as a business owner. They're a map, and a map doesn't judge you for being lost. It tells you where you are so you can decide where to go next.

You're probably not going to love every one of them the first time you look. I didn't. But, a number you don't like is still infinitely better than a number you don't have, because the number you don't have is running your business anyway. It's just running it without your input.

Here's the thing... and I've said this before: I believe we're stewards of what we've been given. Not owners, stewards. And you can't steward something while you refuse to count it. In the parable of the talents, the servant who buried what he had didn't just fail to grow it. He never even looked at it. He put it in the ground because he was afraid, and that fear cost him more than the risk ever would have. Counting what you've been trusted with isn't vanity, and it shouldn't be anxiety either. It's faithfulness. It's how you find out what's actually in your hands so you can do something worthy with it.

So here's your assignment this week. Not all five categories. One. Pick the category that made your stomach drop a little while you were reading, because that's the one with something to tell you. Find that number, write it down, and put a recurring appointment on your calendar to do it again next month.

And, a friendly reminder for you: if you aren't sure which camp you're climbing in (which changes what you should be tracking and what you can safely ignore), take the Find Your Camp quiz at outcomeacademy.com/findmycamp. It takes about two minutes and it'll reveal your camp and the top three hazards that could knock you off your mountain journey at any time.