Measurement. We measure different aspects of our lives every day. What is my weight? What was my
weight last year? What is the temperature? What is the weather forecast?
Measurement is inherently part of our goals. We spend money on the newest GPS equipment to
measure how we are stacking up time wise for our next 10k; we measure how long our commute is in
order to be as productive as we can be.
How many of us measure our business on a daily, weekly or monthly basis? Sure, we have a yearly
comparison of our business when we have our tax return prepared but does that tell us the entire story?
Sales were up by 5% for the year but did we look at the summer months that were down by 15% in time
to react. If we had, we would have had a more successful year.
Many entrepreneurs feel that their gut will guide them and that they do know their business inside and out without spending the time to
analyze. This may be true when it comes to labor hours or sales but do you really know what comprises
your cost of sales, what it takes to generate a sale, what your customers are saying, what your cost is for
that most popular item on your menu or how many labor hours you are expending by staying open
In any type of business, there are many reasons to measure (and compare).
- Measurement is the first step to improvement. When we measure, we compare, we set targets and controls and procedures to reach these targets.
- Measurement says it’s important. Measurement tells our employees that it is important. Employees will buy in when they know it is important.
- Measurement tells you how well your staff is performing. Good results mean good employees. Good employees mean good results.
- Measurement leads to smarter decisions. Measurement can take the emotion out of decisionmaking. Fact based measurements will always win over an emotional decision.
- Measurement leads to better understanding of your business. If you don’t know your numbers, you don’t know your business.
An old axiom is that if it can’t be expressed in figures, it is not science, it is opinion. In the restaurant
business, I had a simple measurement tool that we looked at weekly called “QTC”. This consisted of five
very simple measurements (Quality, Timeliness, Consistency, Cleanliness, Courtesy) and we measured
each on a scale of 1 to 10. At the beginning of the improvement process, and honest assessment
showed twos were the norm but in a short period we rapidly approached tens. And sales almost tripled
within 18 months! Measurement works!
How can an accountant help?