You and your team have to start keeping track of relevant metrics to compare. Comparing data over time allows you to see clear trends in products or services you offer, geographic differences, where profits lie, and more.
You can’t improve your process if nothing is written down. While it may seem daunting to get started, incremental progress each day towards documenting and tracking your business matters. Tracking metrics brings an awareness to you and the team. Similar to incentives, the very fact that you highlight these metrics means that they are important.
Based on the metrics you review in meetings, you can make decisions that affect your business. Profitability slowing down? Perhaps don’t go buy more equipment the team wants. Customer renewals rising compared to recent years due to a new product? Invest more time towards marketing
Public companies declare their growth in revenue, customers, and other aspects multiple times a year. This is how investors can measure the business. We aren’t all building in public or have audacious goals to take our business to the public markets, but you can still aim for that rigor. Keeping the bar high in terms of accountability, whether it is public or not, will make your business better.
A few things to consider tracking in your business:
- Free cash flow over revenue
- Employee retention
- Customer count, growth, and why you lose a customer
- Time invested into each product or service
- Training programs and their impact
- Time from beginning to end of serving a customer
The metrics will differ between industries and what is important to leadership. We are curious, what metrics do you keep track of?
Thanks to Everest Brady for his help, writing, and research in assembling this week’s newsletter.
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This Week on Think Like an Owner
Our guest on this episode is Josh Schultz, current president CaneKast and previously co-founder of the Chess Group. Josh has partnered with Reg Zeller, a former podcast guest from Episode 81 and CaneKast founder, to acquire and streamline foundries across the country. But as Josh and Alex talked about in the episode, that is far from their only ambition.
Josh and Alex talk about what has changed the most in the year since joining CaneKast, how he approaches scaling, organizations, and teams, documenting processes, change management, and finding a complementary partner to work with.
Josh is also a great friend and a person we deeply admire. He’s incredibly intelligent, process driven, and creative, and we always love talking with him. Please enjoy our conversation.
This episode Q&A features Lisa Forrest, from Live Oak Bank, and highlights the question of, “how should folks evaluating companies today, for prospective acquisitions, think about interest rate changes?” Live Oak Bank is a seasoned SMB lender providing SBA and conventional financing for search funds, independent sponsors, private equity firms, and individuals looking to acquire lower middle market companies. If you are in the process of acquiring a company or thinking about starting a search, contact Lisa Forrest or Heather Endresen directly to start a conversation or go to www.liveoakbank.com/think.
Our guests on this episode are Bradley Roofner and Logan Brown, who together, along with a third partner Kade Thomas, acquired WLE, a landscaping firm in Austin, Texas, in 2017. After nearly four years of operating, they sold the company to Brightview, a public landscaping company and one of the largest in the country.
The discussion focuses on revenue quality, a topic Bradley and Logan have given a great deal of thought to. We talk about defining revenue quality and how to identify high and low quality revenue, creating your ideal customer profile, how to sell that customer building a motivated sales organization, emphasizing high quality revenue across an organization, writing more valuable customer contracts, and various tips they have for CEOs looking to boost revenue quality and thereby their company’s valuation. Enjoy.
This episode Q&A features Alexis Grant, founder of They Got Acquired, a media business covering small company exits. The question for the episode centers around building a database of business exits and what she thinks the business opportunity there is with that data. Subscribe to their newsletter on their website and check out their industry M&A reports with stories, valuations, and more.
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Think Like an Owner is sponsored by:
Live Oak Bank – Live Oak Bank is a seasoned SMB lender providing SBA and conventional financing for search funds, independent sponsors, private equity firms, and individuals looking to acquire lower middle market companies. If you are in the process of acquiring a company or thinking about starting a search, contact Lisa Forrest or Heather Endresen directly to start a conversation or go to www.liveoakbank.com/think.
Hood & Strong, LLP – Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected].
Oberle Risk Strategies– Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and Employee benefits programs. If you are under LOI, please reach out to learn more about how Oberle can help with insurance due diligence at oberle-risk.com. Or reach out to the CEO, August Felker, directly at [email protected].
Oakbourne Advisors– Oakbourne is an independent retirement plan consulting firm that helps small companies design and implement great retirement plans for their teams. Whether you already have a 401(k) in place or are looking to start one for your team, please reach out to learn more about how Oakbourne can set your people up for success in retirement at oakbourne.com/think.
They Got Acquired – They Got Acquired is a media business covering small company exits. Subscribe to their newsletter on their website and check out their industry M&A reports with stories, valuations, and more.
