Finding Startup Success Through Financial Metrics

When it comes to offering truly valuable advice to startups, the task of management can’t be brought up enough. While it’s helpful to zoom in and focus on key areas where management can be applied at the micro level of a business, those areas require an equally if not more competent central management team.

Whether an individual or a team comprises management, it’s essential for company leaders to establish actionable metrics by which to judge success or failure. For some businesses, certain metrics will matter more than others. Knowing how to find out the key areas of your business is one of the first big steps you can take towards getting your business working smoothly.

Think of your business in terms of its parts

A useful way to think about your company is to imagine it like a simple machine with inputs and outputs. As a manager, your task is to make sure right buttons are pressed when they should be while the others go idle. To keep the metaphor going, we all know how frustrating it can be when we’re forced to use a brand new technology without knowing how it works. Avid iPhone users are usually frustrated when they’re asked to operate a Windows phone when they have no prior experience and visa versa.

The point is, you need to understand your business through and through before you attempt to design a management system to keep its parts in good working order. The goal with every measurement decision is to make sure you can tell when the outputs are less productive than what you’re putting into it.

Putting communication first

Without a means to solve problems and recognize successes throughout your organization, it’s nearly impossible to envision a bright future for your business. All too often management teams pass the blame of their shortcomings onto the health of the market or other external circumstances they don’t have control over.

While downturns in the market should certainly be accounted for when evaluating yourself, throwing your hands in the air and hoping for better luck next time doesn’t pass for management. In order to get some real problem solving done, you’ll have to open the hood and have a look at all the parts of your business to find and isolate the problem. The systemic nature of problems within your business usually only reveal themselves once the management teams invests the energy in tracking the trail of breadcrumbs back to the original source.

By tracking comparatively poor earnings to poor sales, you may find that salesmen fell behind because they weren’t handed leads by the marketing team. By analyzing your marketing efforts over time, you may find that by downscaling your social media team, you’ve lost a significant amount of engagement which once accounted for a significant amount of your total leads volume.

Where a “band-aid solution” would have probably stopped at the sales team and resulted in restructuring a team that was actually doing everything right, you’ve not only let the actual problem go, but also hindered a part of the machine that was working well. It’s in these kinds of scenarios where poor management can gradually do more hard than good to both your business’ bottom line as well as employee morale.

Early points of focus management teams should pay close attention to

The best way to avoid the kinds of problems presented above is to designate standards by which to measure your business’ actions over time. While it may seem like a rudimentary lesson in business, it’s important to think of these concepts as they relate to one another rather than simply a list of things to check off each time you review your numbers.

In terms of meeting your most important goals early on, the three broad measurements to keep your eye on the most are your cash flow, profits/losses, and assessable growth. While every business obviously requires its own set of measurement parameters from which to judge success and failure, these are the elements of every business which should never be overlooked by your core management team.

If you’re a start-up owner and unsure of how to analyze these financial metrics or others, give us a call. Our outsourced accounting and CFO services experts can help you navigate these waters. Photo Credit: Biking Nikon SFO via Compfight cc

How to Give Effective Employee Feedback

Company-to-employee feedback comes in many forms, but the most common and direct way to communicate performance evaluations comes in the form of criticism. Although today this term has come to connote a negative message, I’m using it in its broader definition, which encompasses both negative and positive responses.

Where the nuance of criticism gets muddy is in its conceptualization as a motivational tool. Not everyone receives criticism the same way and these days it doesn’t take much to actually offend peoples’ sensibilities if you handle feedback without a certain degree of tact.

Being honest and blunt is one thing, but it’s easy for employers to cross into malicious territory simply through choices of syntax and delivery. (more…)

3 Ways To Improve Employee Management Digitally

Regardless of the size, scope, or industry your business is involved in, the effectiveness of your employee management structure is essential if you intend on keeping your company a well-oiled machine with all of its parts in proper working order. This can be hard enough when you have the luxury of having everyone in a shared workspace where access to one another is constant and immediate. Office environments also have a more tangible feeling of community, which gives managers a grasp on the “people” side of their workforce.

However, with digital workspaces bridging the geological gaps, which used to force companies into the same building, a new and interesting array of issues has emerged for HR departments to tackle in order to replicate the same kind of strong bonds between supervisors and their team.

Fortunately, the adoption of online tools and virtual workspaces doesn’t only present challenges for employee/manager relations––it also presents a whole new way to communicate with your team that can potentially go beyond the limitations of the traditional office environment. (more…)

4 Ways To Improve Productivity Through Employee Recognition

With the stress of increasing workloads mounting in many offices across the country, the idea of adequate employee recognition in the workplace is especially important to keeping spirits high amid particularly turbulent times. Luckily, it’s one aspect of management which is virtually impossible to overdo.

People love praise and this seems to hold even truer to the younger generation of workers who might be entering the workforce for the first time. For perspective, most workers of all kinds see very little positive feedback at all.

The practice of handing out annual reviews which is now becoming culturally ingrained in our business world might be useful for providing employees with a standardized way of comparing performance levels over time, but lacks the element of value and reward that gives good work the admiration it deserves.

If you aren’t convinced about the importance of dishing out some degree of proper recognition, consider the effects it has on your organization’s bottom line. A 10-year study that appeared in The Carrot Principle found that among 200,000 people, efficiency and return on equity were sometimes three times higher for companies who implemented recognition programs. (more…)

How To Initiate New Employees The Right Way

the right track

Start new employees off on the right track with these expert tips.

Onboarding new employees can be an arduous process. First, you have to create job listings and read resumes and cover letters. After this, you have to pick a few candidates and conduct interviews that actually tell you something about them—no easy task.

But even after you’ve selected the right candidate for the position, arguably the most important part of the onboarding process is still left to be done: getting the new employee up to speed to the point at which he or she can start producing. It’s especially important for start-ups and small businesses to make this process as smooth as possible, because the growth of the company is often tied to new workers’ abilities to be quickly initiated into the work flow.

Entrepreneur.com’s Gwen Moran recently talked to seasoned executive recruiter Stephen Raz about his recommendations for quickly assimilating employees on their first day, as to start this process as quickly as possible. (more…)