Importance of Metrics for Profit

Metrics is the family of measurement tools that a business puts together to provide feedback on its position on what ever factors it chooses to monitor. The most common is the humble profit and loss bookkeeping.  One of the most sophisticated might be something like measuring your e-commerce performance with Google Analytics. There is an old saying that "what gets measured, gets done"; referring to the fact that staff who know something is being measured and evaluated, will try to see it goes well.

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The trick is to make sure that you are measuring the most important things and just not indulging in an array of 'vanity' metrics.

 Once it is more fully developed, this discussion will also rely on your familiarity with Throughput Accounting (see Throughput Accounting)

Get started with this book

There is a very useful discussion on Financial Metrics in the context of a Business Plan in the book Start at the End: How companies can grow bigger and faster by reversing their Business Plan  (Lavinsky, David (2012) Chapter 4).

This book is likely to be a handy reference on Goal Setting and on Business Plans in general so it may be a good addition to your reference library.



Lavinsky, David ((2012)  Start at the End: How companies can grow bigger and faster by reversing their Business Plan Wiley.  This book pushes many buttons for us.  Works for small business, starts with the destination goal in mind and is attuned to the 80/20 Rule.  Good Chapters on Goal Setting and Metrics make it useful for that alone.