We invited 25 successful e-commerce entrepreneurs to a private event in St. Lucia 10 years ago. During one of the sessions, I sat in the back of the room while one of the more experienced attendee presented. On the slide, he displayed a picture I still remember today: an ostrich in the desert with its head buried in the sand.
“This,” he explained, “is how most entrepreneurs deal with accounting.”
That’s me, I thought.
Finances for our business were a mess. Our business grew from $0 to $15 million in revenue in 18 months. We let a family member do our accounting — which meant that it didn’t get done at all. The problem got worse the faster our business scaled.
It took two years and hiring an in-house financial team, but we dug out of our mess.
We hide from and ignore our problems.
“Oh, my doctor says I’m healthy,” we think, while a belly shaped like a large half-empty sack of potatoes hangs over our pants.
“I’m working really hard on my business,” we tell ourselves. Yet, we know our business is losing money and we need to face reality.
I mentioned in Lesson 6, “Where Does Your Time Go?”, that I’ve wanted to gain weight in the past. I trained jiu-jitsu for six years. I didn’t compete, so all I cared about was beating the most number of people possible at our gym. That included 6 foot 3, 240-pound monsters like Mike. The bigger I was, the easier it was to deal with Mike.
Wanting to gain weight didn’t work. I needed to measure what mattered.
I started weighing myself every day.
I placed a scale on the floor next to my desk in my home office. Every day, I weighed myself and charted my progress on a sheet of paper I hung on the wall above the scale.
In one week, I started gaining weight — after making zero progress for six months.
Measure what matters.
First, decide what outcome you wish to improve.
Second, determine what matters most to produce that outcome. If you don’t know what is, ask three to four people who have succeeded in that area what one to two measurements you should track.
Here a few examples outcomes and which metrics to track:
- Grow sales: 1) sales , 2) leads, 3) traffic/visitors
- Increase profits: 1) net profit, 2) gross profit, 3) top five major expense categories as a percentage of sales (e.g., advertising spend / sales)
- Gain weight: 1) weight, 2) calories consumed versus burned per day, 3) progress on major lifts (squat, deadlift, bench press, shoulder press, barbell row)
Third, measure every day. Weekly is not enough. If you don’t remind yourself of your goal by measuring your progress towards its accomplishment daily, other priorities — emails, Slack messages, small family requests — cause you to lose momentum. Progress produces results. Once progress stops, it’s 10 times harder to get going again.
Keep the momentum going.
Measure every day.
Never stop until you get the outcome you want.