Step Five: Insure Success
Set goals and benchmarks.
A goal is where you want to get eventually. A benchmark is like a mini goal—the steps you know you can hit along the way that will help you eventually reach the big cheese. Both are equally important. You need a way to measure your own success.
Keep a handle on the numbers.
If you don't have a handle on the numbers, profits and pricing, you're kind of going on a wing and a prayer. You're floating wherever the wind takes you, but when you get real clear about the numbers side, everything else falls into place. Entrepreneurs think that if they just have a good product or service, the numbers will take care of themselves. By and large, those are the businesses that tend to fail. So many small businesses in the graveyard had good products and services, but they never had a handle on what would constitutes profitability. If it's worth doing, it's worth tracking.
Review numbers and benchmarks every 30 days.
The other mistake is people look at numbers once a year or once a quarter. Entrepreneurs and small business owners need to have critical numbers and benchmarks, and they should be measuring those on a 30-day basis—quarterly reports are way too long. You have to know what your fixed costs are, and make sure you know that you're pricing products and services correctly. Many people don't know, so they charge what they think is right. In most cases they are way too low, and then it takes way too long to reach profitability. You have to do a combo of looking at competitors and your own fixed and variable costs.