Articles

Can You "Measure What Matters"?

Steven Brody
Silver Fox Advisor
August 2024

Here is a quick book summary of the principles.

"Measure What Matters" by John Doerr is a practical guide to setting and achieving goals using the Objectives and Key Results (OKRs) framework. Doerr draws on his experience as an early investor in companies such as Google, Intel, and Amazon to illustrate how OKRs can be used to drive growth and innovation in organizations of all sizes. The book provides a step-by-step approach to implementing OKRs, with real-world examples and case studies of companies such as Google, Intuit, and the Gates Foundation. Doerr also emphasizes the importance of alignment and transparency in goal setting and measurement, as well as the need to constantly adapt and refine OKRs to stay on track. "Measure What Matters" is a valuable resource for managers, executives, and anyone seeking to improve their ability to set and achieve meaningful goals.

To train an executive team to use the principles above, consider:

Consider using AI to improve the speed & quality of learning. Tools like ChatGPT & Claude are good examples to improve productivity. 

If you need help or assistance with these concepts, talk to a business advisor who has knowledge and experience in this area. We encourage you to visit our website at www.silverfox.org and learn more about the Silver Fox Advisors, and how they can assist you with your business needs, as well as to discover more about our great programs and community outreach endeavors.

Steve Brody, Business Advisor

Brody & Associates
www.brodyassociates.net

Business Tips From the Editor -August 2024

BUSINESS TIPS FROM THE EDITOR

August 2024

Richard T. Hendee, Editor
The Silver Fox Advisor

         “SMALL BUSINESS OWNERS’ BIGGEST CONCERNS”

As I was thinking about a topic to write about for the August 2024 Business Tips article, I googled “What are the biggest concerns of small business owners,” and I was not surprised to find that inflation appears to be the major concern, by far, of most small business owners.

Inflation can affect so many areas of any small business. On the revenue side of the income statement sales can be reduced because the business’ customers do not have as much cash available to purchase their goods and services. Or, the products and services the business sells to other businesses are not being purchased as much because their sales are also down.

Additionally, the business may not be able to increase its pricing as fast as expenses are increasing because its customers simply may not pay the increased pricing and seek similar products or services from other sources at a cheaper cost.

A business’ Cost of Goods Sold typically increases in an inflationary environment due to increases in their own or suppliers’ raw materials, manufacturing, shipping, and labor. 

Nearly all expenses of any business increase in an inflationary setting, without exception. Labor, typically the largest expense of any business, increases not only with new hires but existing employees look for larger salary increases, bigger bonuses, and more benefits because their family expenses are increasing every day. Insurance costs, utilities, rent, office supplies, and almost every expense line increases, sometimes month-over-month.

So, what should a small business owner do to manage through inflation cycles? The primary key is paying attention to your business’ financial statements, both income statement and balance sheet. During these inflation cycles it takes more that just looking at the financials monthly, it takes analyzing the numbers trends on a comparative month-over-month basis and also year-over-year. As an example, look at what your business is paying for overall cost of goods sold, (in real dollars and as a percentage of revenues) last month vs. prior month and at the beginning of the year and for the same period last year. Do the same for all of the larger expense line items. Hopefully the business’ revenues are increasing at the same or similar levels. If not, your bottom line will undoubtedly be less.

The next question you are probably asking yourself is – “Well, what can I do about it?” There can be a number of actions that a business owner can do in these situations. Obviously, increase pricing of the business’ products and services (if your pricing hasn’t increased in a while, the increase may need to be made a little at a time over time – but controlled and managed). Look at every line item in the Cost of Goods Sold and make adjustments as needed without jeopardizing quality or supplies or risking employee burn-out. Next, look at every expense line item to determine areas where savings may be possible. Here are a few examples: put all of the business’ insurance out for bid, seek other merchant service providers to potentially lower processing fees, protest property taxes and try to get the taxes lowered, combine some employee duties with the intent of possibly lowering the business’ headcount, refinance business debt to possibly decrease the business’ interest expenses, cut back on rented office space that is not being utilized to reduce rental expenses, seek lower cost utility service providers.

If you need help or assistance managing through this inflation business cycle, talk to a business advisor who has knowledge and experience in this area. We encourage you to visit our Web-site at www.silverfox.org and learn more about the Silver Fox Advisors, and how they can assist you with your business needs, as well as to discover more about our great programs and community outreach endeavors.