Sarah Novotny, Head of Digital, Creative and Tech at GC Business Growth Hub, shares the Digital, Creative and Tech team's pieces of advice on how businesses are measuring their way into efficiency.
Measurement and metrics are often not as high up on the business agenda as they should be. This is particularly true where it concerns start-ups and SMEs in the creative industries.
Yet the experience that every business has gone through with the Covid-19 pandemic has brought a much greater emphasis on measuring performance. Businesses were forced to completely stop their usual activities at the outbreak of the pandemic and before they could offer new services, there was a short period where many had to wait and take full stock of what was happening within their organisation.
This period of reflection demonstrated the real value of metrics, especially when considering commercial performance. The lesson to be learned was that if a company is to be prepared for anything, it should take stock of performance on a regular basis.
“What gets measured, gets managed” - you may have heard this quote before. It’s attributed to the famous 21st Century management consultant, Peter Drucker. There is an undeniable truth in this wisdom, which is probably why it caught the attention of business leaders around the world in the 1960s. While the sentiment still rings true, there's a world of difference between what you could measure in the 1960s and what's available at the click of a button today.
With so many individual data points that can be accessed, analysed and measured, it can be a daunting task where you can’t see the wood for the trees.
While what matters for each business will differ from one organisation to the next, there are some fundamental areas and universal truths that can guide companies in the right direction and help make sure that they are taking the right measurements for success.
The Hub works with renowned thought leaders to help provide cutting edge insights. David Crawford, has detailed some of his top tips for businesses.
1. Revenue generating capacity for each team member
Firstly, the single greatest blind spot for digital, creative and tech (DCT) business owners is having a real grasp on what their team’s overall revenue generating capacity is.
Knowing the very basics - how many people you employ and contract, how many days they can work across any given period (factoring in time for training, leave, periods of sickness, etc), will help determine to what extent each team member is chargeable.
Nobody in your business will be 100% chargeable and some will be zero chargeable. It might sound cold placing figures against each team member but it’s critical. When you know what each team members charge out rate is, you can then begin looking at how things stack up against overheads and whether your operation correlates with overall costs.
This is crucial in determining your overall business capabilities – strengths and weaknesses – and will give teams something to work towards.
2. How much revenue can be predicted for the coming months? How much new business is in the pipeline?
Whether you're looking at recurring revenue, invoices that are due or simply the work that is due to come in, doing your level best to predict the future is essential, regardless of sector.
Properly understanding your revenue generation and analysing where you anticipate seeing growth or new opportunities can give you the chance to explore efficiencies and quick wins.
In addition to the recurring revenue that can be predicted, this can also help you win new contracts.
3. Cash in the bank
Cash is king. Over the course of the pandemic, the businesses that remained liquid and had war chests available were the ones that survived with minimal disruption and were best equipped to bounce straight back.
Measuring and assessing your own liquidity can help you plan your investments, spending patterns and how to budget time and resources properly.
If you cast your mind back 18 months, businesses were making furlough decisions before furlough was even announced. That gave greater focus on metrics and performance and a number of creative and tech businesses have improved as a result.
4. Explore what else can be measured
Einstein is often quoted as having said that ‘not everything that counts can be counted and not everything that can be counted counts’. Maybe it's appropriate that the quote actually came from William Bruce Cameron and his piece of work - Informal Sociology: A Casual Introduction to Sociological Thinking. Does Cameron count or not?
When applied to a business, rather than experimental physics or sociology, it raises questions about your business' priorities and whether you can foresee major trends and properly understand the nature of business.
Businesses need the opportunity to get under the bonnet of their own organisation and understand its performance at every level. It helps if it’s done in a formal, structured and regimented way.
There are a number of tools, efficiency metrics and suites available to businesses. You can look at average win rates and the win ratios of certain clients, and then adjust pitching strategies if it’s low. Or you could look at the rate of newsletter sign-ups on a website, the number of client reviews of complaints.
While it might feel like a luxury, taking time out every couple of weeks to take stock of clients, projects and people means that you can fully assess the health of an organisation, as well as understanding what metrics have a lasting impact on your business' fortune. Give yourself the time to really understand your business.
All of the topics above, and several more form part of the Hub’s Greater Connected programme series and its overall Digital, Creative and Tech advice.
Access high-impact support and specialist guidance for Digital, Creative and Tech businesses in Greater Manchester at businessgrowthhub.com/dct. Alternatively, get in touch with GC Business Growth Hub at BGH@growthco.uk or on 0161 359 3050.
This and other GC Business Growth Hub projects are part-financed by the European Regional Development Fund (ERDF) as part of a project designed to help ambitious SME businesses achieve growth and increase employment in Greater Manchester. The Hub is also supported by the Greater Manchester Combined Authority and Greater Manchester local authorities.
Sarah Novotny, Head of Digital, Creative and Tech Sector Business Support
Sarah is passionate about bringing effective business growth strategies to the community behind Greater Manchester’s digital, creative and tech sector.
With almost a decade of experience in growing teams and businesses, Sarah strives to bring improvement by connecting creative minds and establishing environments which accelerate growth
Sarah brings an international perspective and is well known for her straight to the point way of approaching business support. She has worked with teams in blue chips, Scaleups, SMEs and Startups, and prides herself in bringing learnings around strategy, sales, innovation, pricing and productization from all these adventures into an ambition to interlink and align industry needs with the GM sector support offering.
Sarah leads several programmes for the GC Business Growth Hub including Greater Connected, Exceed and the Creative Scale-Up Programme which are delivered to the Greater Manchester digital, creative and tech sector network.