As gas prices continue to increase, a few stations in my area manage to keep their rates about $.20 lower than the rest. These stations consistently have lines that are three and four cars deep at each pump. You might think that taking the time to wait at the lower-cost station is a great way to save money. But what happens when you do the actual math? My average fill-up is about 10 gallons – a savings of about $2 – at the station where I would wait about 20 minutes for my turn at the pump. If we assume that filing up at a station without the wait would take about five minutes, versus 20 minutes at the cheaper station, the real question becomes–what could I do with the extra 15 minutes?
The fact is that giving away 15 minutes of your life for $2 is not a good investment. But if I hadn’t done the math, I might be sitting in line to pump gas and not realize that isn’t my best option.
If you have ever worked for a large corporation, you’ll notice they measure everything. This is because they know that good data leads to good decisions. Lack of data or relying on intuition alone often results in decisions that are unwise and can be costly.
Many smaller businesses fall into the trap of making decisions without data. It takes time and effort to gather data before making a decision. Here are some common scenarios we’ve seen at Accelerate Your Success:
- A business tracks overall sales, which are excellent, but doesn’t drill down to the individual contributor level. A deep dive reveals that a highly paid and highly regarded executive hadn’t met sales goals in months.
- A service organization didn’t take into account the entire cost of the service when setting prices. Some services were merely breaking even when the cost of the products used was included in the calculation.
- A nonprofit organization that felt their fundraising event raised a lot of money until factoring in the cost of putting on the event itself.
- A service provider who didn’t calculate the travel expenses into the total cost of providing services. For some clients, this dramatically reduced the actual benefit to the organization for providing that service.
Every time you set out to make a significant decision in your business, ask what measurements you need to make the best choice. Then, set out to gather that data. Some items are harder to quantify than others, but all data is helpful. In many cases, having the data turns a seemingly difficult decision into an astonishingly clear and easy one.
Here are some areas to consider:
- Are you including the total cost when determining if you made or lost money on a particular deal, sale, or service?
- When deciding whether or not to invest in your business have you projected the improved revenue with the investment and the potential loss without it?
- When a valuable employee turns in their resignation, have you considered the cost of replacing them when deciding whether or not to counteroffer?
- When delaying providing an employee with training, have you projected the loss in productivity?
If you aren’t sure where to start gathering and measuring data in your organization, speaking with a coach might help. You may also want to consult with other key advisors like your CPA or financial advisor.
Charlise Latour a business coach and owner of Accelerate Your Success. She works with each client to determine what their goals are and create a plan so they can achieve them. She is actively involved in Dancing & Singing With The King which raises money to promote dance education including working with local schools to offer dance classes during the school day. This is a natural fit as she is an avid ballroom dancer.