177: Measuring What Matters in Your Design Firm
177: Measuring What Matters in Your Design Firm
with Michele Williams
Welcome to 2022! This year we are going to focus on metrics in our companies. Identifying what metrics are, what we need, and how to go about monitoring them. Last year it was all about strategy – and this year all about how to make the strategy work. Listen in for tips and tricks that will help you determine if you are still on task or not.
Topics Mentioned:
Metrics
Focus
Analysis
Standards
Listen to the Episode
Every year I choose a word and a focus. In 2019 my focus was marketing, and the word was intentional. In 2020 my focus was adapting and codifying my AIM with Intent™ methodology and the word was grace. And goodness knows we had to heap loads of grace on everything that year. 2021 brought new challenges and my focus was on building strategic plans. My word last year was ease. How do we scale with ease was the biggest question I worked through and tackled in my company and offerings. Now, in 2022, my focus is on metrics and the word for the year is analysis.
This last year I have helped many of you begin a strategic plan or formalize one either through listening to this podcast or in my coaching program. And one of the most important sections in a strategic plan is where you create metrics to aim for as you grow in your business. And while creating these measurements needs to be done, what is most important is actually measuring to a measuring stick.
When I was a young girl, I can distinctly remember going to my grandmother’s house each year around my birthday and standing against a piece of wood paneling in her kitchen where we would be measured. A line was drawn on the board panel with an ink pen right above our head, and we noted our name, age and the date. My grandparents and parents had their measurements on there, in addition to my aunts and uncles, my cousins and my sister. Later, when I had kids, they were measured on that same wall panel. Since we were measuring in the same place, in the same way – we could easily see the progress of our growth year over year. If we had measured all over the house in different rooms, the progress would have been much more difficult to read and understand. We would compare ourselves not only to our own growth – but to that of our family members at different times and ages. When my grandmother sold her home to move into a nursing home, we removed that wooden panel in her kitchen and moved it to my mom’s house where we can continue measuring our kids and grandkids.
The same principle holds true in business. We need to determine what we are going to measure, when we are going to measure it, how we are going to do that, and when are we going to review what we have measured. While this may sound like a lot of work, it doesn’t have to be.
A metric is, simply stated, a standard of measurement. In business we use three basic measurements: time, money, and status.
Let’s start with time. We measure time on our calendars. So, if we set a goal that we are measuring using time, we might look at how long something will take in hours or look at a due date or even look at how long a project or phase might last over a time period. When we are all using the same standards of measurement, it makes checking in more consistent.
One of the areas that you will hear productivity coaches or advisors talk about is understanding time. If any of you have tried to guesstimate how long something will take, you know like I do, that it is easy to underestimate. This is why it is so very important to create time budgets for projects and then measure to them with time tracking, both in the amount of time the tasks took as well as measuring to a completion date. Keeping up with your hourly tracking can provide a wealth of knowledge as you analyze what is working and not working in your firm.
The second area of measurement is money. We measure the dollars that the business brings into the firm in revenue and the costs associated with that work in cost of goods and expenses. These measurements will be considered in both dollar amounts as well as percentages or margins. We may create budgets for the year and then measure each budgeted area against that initial value we set. Perhaps we measure the return on an investment of a marketing piece. We certainly measure the project budgets we create for and with our clients to ensure that their money is being spent properly. And hopefully we are measuring our accounts receivable and accounts payable to know what we owe and who owes us so that we can stay cash flow positive.
This last area that we measure to is status. This could be a status of completed or uncompleted. It could be a status of in progress or shows improvement. Typically, it is measuring something that is not money or time. This could be a measurement of attitude or other character or value trait that you are wanting to have exhibited in your firm.
When we create measurements around a task, item, or sale – or anything, it is because we think that knowing how we are meeting or exceeding the expectations of that activity will help us continue to provide excellent service and revenues. If we are measuring things that do not matter to us, we will quickly become bored, not measure them, and think that all measurements are slowing us down.
Each person on your team should have something that they are measuring within their job description, and they should know how that action or activity will generate profits for the company. Everyone impacts profits. When you consider areas of waste in a firm, each person and how they use the resources can impact the over or under use of that resource. When we grasp how our work is measured and we buy into seeing improvement or even just meeting goal, then measuring will be much easier to do. In corporate, often each area of a company is tied to an area of the P and L and the management is responsible for monitoring to that section of the income statement. It is clear to them that how they conduct business matters. And the best of those managers will invite the team into understanding the impact of their specific role.
I like to start with a few simple financial measurements. Something like:
Total Revenues
Cost of Goods Sold
Gross Profit
Expenses
Net Profit
Actuals vs. Budget for the month based on my P and L
Project Actuals vs. Budgets
As I am reviewing my strategic plans, I usually look for three areas I always want to consider: people, processes, and profits. This is the AIM portion of AIM with Intent™. What do those measurements look like for each area? You might even consider taking one process to focus on each quarter and measuring to that process in one of the three ways described earlier. Focusing on that one process to tighten and button it up, fix any holes or cracks that have developed over time, identify what might be missing or could be added to make it work better. Then measure to those improvements. The next quarter, choose another process to improve and measure to that.
Our human talent is measured based on performance and education plans. Create these metrics with your team members and help them measure themselves to the improvements they are making in their job. Learning new things and growing in our careers keeps us all moving forward. Being in a stale job with no option to learn or grow is a quick way to stunt an employee, a team and ultimately a company. Job descriptions are a huge asset as people are looking to attain the next higher-level position. It gives them a clear measurement for what is needed in that role.
Measuring client success and outcomes may be another focus. Again, all of these should tie into your firm’s strategy. Being clear on what you want to accomplish and by when – then putting measurements around the steps or incremental improvements will keep you and your team moving forward together.
As we are beginning this new year, determine where you want to focus. If at the end of this year your firm could improve in 3-4 areas of your company – what would those be? Identify them and then write out what you would need to measure to capture that improvement. Then take a baseline, add in some action steps and measure improvement. At the end of the year, you will be amazed – because what you focus on increases. Remember the saying, you get what you inspect, not what you expect.
In my coaching program this is going to be our focus – or how we roll – this year. If you want a team to support you, strengthen your business understanding and keep you accountable, go to our work with me page on the website www.scarletthreadconsulting.com and apply for a Discovery Call. We totally geek out over all of this and would be jazzed to help you see the power in measuring. Be clear and confident in where you are going – because you won’t get there by accident. Success is intentional and so is profitability.
Key Thoughts:
One of the most important sections in a strategic plan is where you create metrics to aim for as you grow in your business. And while creating these measurements needs to be done, what is most important is actually measuring to a measuring stick. Michele (2:03)
We need to determine what we are going to measure, when we are going to measure it, how we are going to do that, and when are we going to review what we have measured. Michele (4:11)
It is so very important to create time budgets for projects and then measure to them with time tracking, both in the amount of time the tasks took as well as measuring to a completion date. Keeping up with your hourly tracking can provide a wealth of knowledge as you analyze what is working and not working in your firm. Michele (5:16)
Each person on your team should have something that they are measuring within their job description, and they should know how that action or activity will generate profits for the company. Everyone impacts profits. Michele (7:21)
Contact Michele:
Facebook: Scarlet Thread Consulting
Instagram: @ScarletThreadATL
Website: ScarletThreadConsulting.com
LinkedIn: Michele Williams
References and Resources:
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