Welcome to the System Savvy podcast.

I'm your usual host, Jordan Gill, and today we're getting into something that either makes you feel super in control or has you break it out into nervous sweats.

And that's metrics.

Yeah.

The numbers behind your business.

But before you go into a panic, don't worry.

My guest today is Sandra Booker, Fractional COO at Sidekick coo.

And she's here to break it all down in a way that actually makes sense, since Sandra is truly a genius at turning business chaos into clarity.

And today she's walking us through the three metrics every business owner needs to track and know it's not just revenue.

Right.

I feel like that's the only number most people know.

So if you've ever obsessed over unsubscribes or stared at stripe notifications while ignoring cash flow, been there.

This episode is a must.

Listen.

So grab your notebook because you're about to get the clarity you need to stop tracking the wrong numbers and start making more data driven decisions that actually move the needle.

Amen.

Let's dive on in.

Hey, System Save me, listeners.

I'm Sandra Booker, Fractional COO at SciTech COO.

I help business owners fix the chaotic roller coaster that is their business.

Because, let's be real, nobody signed up for a ride full of stomach turning drops and neck snapping turns.

With me by their side, my clients always know what they should be focusing on and when.

And they never feel alone or stuck.

They get to celebrate win after win as they consistently hit their goals and can finally see their efforts come to fruition in the form of less stress and overwhelm, more freedom and flexibility, and more bankable profit.

Now, on this episode of the Systems Save Me podcast, we're going to be tackling something that either excites you or makes you break out in a cold sweat.

Metrics.

Yep, numbers.

Data.

That thing that you either obsess over or completely ignore.

If you're someone who's tracking only revenue right now, or on the flip side, you're tracking so many numbers that you don't actually use any of them, then we need to talk.

Because tracking too many numbers or tracking the wrong numbers is just as bad as tracking no numbers at all.

So let's get into it.

These are the three metrics that you need to be tracking if you want to have a thriving business.

Now, metrics can be tricky.

It's hard to know what information you need to track or what the data is telling you.

And because it's so hard, there's a really good chance that you're either tracking nothing but revenue in your business right now, or you're tracking a bunch of metrics that don't really tell you much of anything.

And if you're currently spending time tracking numbers that you don't actually use to inform any of the business decisions that you're making, this is your permission to stop.

That's not to say that we want to stop tracking metrics entirely, but we do only want to be tracking the metrics that matter, specifically the metrics that matter to your business.

So many of my clients start off obsessing over, you know, the three people that unsubscribed from their last email that they totally Forget.

The other 2042 or 10,042 people who happily opened and presumably read their email, or the 20 plus people who reached out to say that they actually enjoyed the email.

Obsessing over the wrong metrics like that can give you a really skewed vision of what's going on.

Years ago, before I was a fractional coo, a business owner that I knew set their eyes on that million dollar revenue goal.

They were 100% focused on bringing in that revenue.

They looked at that number, their revenue number, twice a day.

They took screenshots of their stripe notifications.

And their revenue did go up.

It went up and up and up.

They were completely unstoppable.

And after a year of very hard work, a lot of determination and unwavering focus on that goal, they posted all over social media that they had done it.

They'd made the million dollars.

Woo hoo.

They were absolutely ecstatic.

But fast forward four months later to tax time and they ended up posting that they actually lost their home.

Yes, they had made a million dollars, but they had spent something like $1.3 million to do it.

They had been focused only on revenue, only one metric, and it was not the metric that actually mattered to their business at that time.

They had been tracking other metrics in their business, but also nothing that mattered.

And because of it, they weren't seeing any of the red flags that were likely flying up everywhere.

Instead, they just saw that steady upward trend toward their goal and thought they were golden.

And things like this happen to business owners all the time, all over the world.

Especially when it comes to money in your business.

You get caught up tracking how many likes you get on your Instagram reels or how many people downloaded your last podcast instead of looking at your financials too hard.

In my friend's case, they completely ignored their cash flow.

And they didn't worry about figuring out the return on the investment for any of the courses, programs, masterminds or tools that they had invested in.

And it was a lot.

There's no shame here because this can happen to anyone, even me.

A couple of years into my business, I got a little too comfortable.

Money had been coming in like clockwork.

It seemed like there was always a client waiting to work with me every time a contract ended.

And I was so secure in that status quo that I started putting off my check cash flow task.

Week after week, month after month, I pushed that task off until one day I was just sitting down at my desk and I started doing like a mental tally of the invoices I had sent out the day before and something didn't feel right.

And then my stomach gave this huge flip and the oatmeal I had for breakfast felt like a boulder in my gut as I began to realize I might be in trouble.

The tears flowed hot and heavy that day, blurring the cash flow report that showed I was only weeks away from going broke.

I had been so used to money coming in and the right people finding me at the right time that I hadn't thought to put much effort into replacing clients when their contracts ran out.

Now lots of hard decisions had to be made really fast and luckily I was able to make some quick moves, ask for some help, and I pulled things back from the edge.

But that was a huge wake up call for me.

Always watch your cash flow.

This is a non negotiable cash flow AKA the Can I pay my bills?

Number is the first metric that every business owner needs to have a handle on.

It's not enough to look at your profit and loss statement once a quarter when your bookkeeper gives it to you, you need to know how much money is flowing in and out of your business at all times.

If you're making spending decisions based on your bank balance or worse, looking at how much room is on your credit card, you're setting yourself up for a world of hurt.

Your budget and your cash flow should be the deciding factor on you joining that $30,000 mastermind or buying that $3,000 program that you've been eyeing.

Having a budget and tracking your cash flow means that you can spot slow seasons before they hit.

Plan ahead for big investments instead of panic spending and actually sleep at night knowing that you're not going to wake up to a financial dumpster fire.

I now check my cash flow every single Friday.

It takes me about 15 to 20 minutes and I never get blindsided anym.

Now let's talk about your cost of doing business AKA the Are my prices even right number.

If you Google it, cost of doing business isn't going to come up in Most people's top 10 metrics to track.

But without it, you're going to struggle to make decisions you feel confident in.

Especially decisions like can I take that month long sabbatical in August?

Or how long can I take for my maternity leave and what is my business going to look like when I get back?

Here's how to figure out your cost of doing business.

You're just going to take your annual non reimbursable expenses plus your desired salary, if it's not already included, and divide it by the number of days you actually work, AKA your billable days.

For example, say you work a traditional five day work week minus maybe four weeks vacation and 10 public holidays per year.

Now that's going to mean that you have 230 working or billable days.

If your expenses are $40,000 and your desired salary is $100,000, you would divide 140,000 by those 230 days to get $608.70.

That means that every day you work needs to bring in $608.70 in order for you to break even.

Which means if you're bringing in less than $11,600 a month, well, you have a problem.

Knowing your cost of doing business will help better understand your profitability and how much you need to be charging for your products and services.

The true cost of taking any type of sabbatical or reducing your hours or taking an extra long vacation, and the true cost of reallocating your hours to non billable activities.

Like how much does it really cost you to play around in canva for a day making designs because you enjoy it or re recording your course even though none of the content has changed, you just think it could be better.

There is a true cost of doing those things and knowing your cost of business is going to help you figure it out.

And finally we have your critical number, AKA the this drives everything number.

This is the third metric that every business needs to be tracking, but it's also different for every business.

It's that one number that when changed, pretty much impacts everything else.

It's often that one number in your business that seems to be a constant problem, or that you're always thinking about.

That one metric that most closely represents the value you bring to your customers.

For Facebook, it would be its active daily users because more users equals More ad revenue, which is their bread and butter.

For an e commerce site, it might be the average order value because increasing that number directly impacts revenue without necessarily having to bring in more customers.

For a SaaS company, a software as a service company, it might be their churn rate.

Keeping customers longer is crucial to a subscription model.

If you're a coach, maybe it's the number of sales calls in your pipeline.

A mortgage broker could be the number of free mortgage consultations you have scheduled.

A membership business, Maybe it's your monthly retention rate.

So how do you find yours?

First you're going to ask yourself, what's that one number that when I improve it, everything else gets better?

That one number where I'm like, oh, if only I could fix that number, everything would work out.

Once you know that number, you can set up an annual goal for it and then brainstorm and implement on projects that you can do to make that number better.

Once you start doing that, game changer.

So let's recap.

If your business strategy is based on 100% vibes and no data, or or all your decisions revolve around Instagram likes or you have 17 different spreadsheets, each with 50 columns worth of data, and you don't use any of it when making decisions.

Forget all of that and focus on your critical number, your cost of doing business and your cash flow.

Now those are the three metrics every business should track.

But they're not going to be the only metrics that you track.

You can just start there.

But a good rule of thumb is to identify no more than three to five key metrics for each goal or project that you're working on in your business.

Now, one last thing.

Because you're fancy and ready for next level tracking, there are actually two types of metrics that you kind of need to know about.

So you have your leading indicators which predict future success, things like your website traffic, your email subscribers, and then you have your lagging indicators.

And those things tell you what already happened.

You know, things like how much revenue or sales you made last month.

Now, if you're only tracking lagging indicators in your business, it's like you're driving by looking at your rear view mirror and never through your windshield.

And if you're only tracking leading indicators, you're basically going somewhere you've never been without a gps.

You need both in your business.

For instance, say you want to increase your revenue by 20%.

You're going to want to determine three to five metrics that you can use to keep track of your progress toward that goal and have a mix of both leading and lagging indicators.

So you could choose like your website traffic, your conversion rate, your average order value, those are all leading indicators.

You could also choose your customer acquisition cost, your customer lifetime value, those are your lagging indicators.

So if you see that your website traffic is down, you can expect that your revenue is going to be down.

If you see that your conversion rate is up, you can expect that your revenue is going to go up.

And if you see that your average order value is going up, then obviously sales is probably also going up, but also your customer lifetime value is probably going up.

So being able to see both of those things is going to help you kind of create a feedback loop that you can leverage into continuous improvement.

Now, once you start tracking your metrics, you're going to want to make sure that you review them regularly, because if you're not looking at them, there's no point of tracking them.

Some metrics, especially those that are leading indicators, you're going to want to review those weekly or monthly, depending on the number.

Well, lagging indicators, you're probably going to analyze those monthly or quarterly and make sure that when you're reviewing your numbers, you ask questions about what you're seeing.

So things like, are you on track to hit your goals?

What factors, internal or external, might be influencing the numbers that you're seeing?

Is there any opportunity or potential issue here?

How might we take advantage of an opportunity or mitigate a potential issue?

Pay close attention to any spikes or dips that you see and investigate those thoroughly and always be working towards steady improvement.

Now, if you're just getting started with metrics, you're going to want to keep it simple.

Start with basic tools like spreadsheets or simple dashboards to monitor your metrics regularly.

And keep the list of metrics that you're tracking small and very specific.

You should always know why you're tracking a specific metric and how it's going to be used in your decision making and strategic planning.

Always remember that the goal isn't to track data for data's sake, but to use it as a compass for strategic decision making.

And that only works if you're tracking the metrics that truly matter to your business's success.

Don't get distracted by vanity numbers or by what other people are tracking.

Okay, so you've got your marching orders.

Step one, identify your cash flow, your cost of doing business, and your critical number.

Step two, set up a simple way to track them.

Google sheets, simple dashboard, whatever works.

And step three Check them regularly.

I do Fridays, so just pick a day.

Check them regularly.

Ask yourself questions about what you're seeing.

If you want to go deeper on this topic and score some really helpful resources to get started, you can grab my KPI accelerator package.

You'll find it@sidekick coo.com accelerate and this free resource pack includes a 12 month business budget template, the simply impactful KPI dashboard and my Critical Number Advisor which is a custom GPT to help you discover your own critical number quickly.

And don't forget, follow me on Instagram idk COO till next time.

So good right?

Thank you so much for listening to this episode of the System Save Me Podcast.

If you loved this episode, I would so appreciate a review on whatever platform you're listening on.

But also go up on the guest host.

Connect with them on Instagram, LinkedIn or wherever they suggested to reach out.

I hope you're having a great day and I will see you on the next episode.