KPIs — ugh, more numbers to follow and graphs to chart.
Core Values — um, what are those?
If you’re not using these two crucial things on a daily basis, you’re probably losing money or opportunities and may be struggling with some aspect of your business. And yes, they’re that important.
I’m a bit like you probably are. I don’t enjoy looking at the numbers (well, except for that profit number!). I would rather get to work and do something, not read reports or spreadsheets about Real Estate Disruptors. But I make myself look at them and we measure many key points, because we have to if we’re going to continue growing and performing the way we want to.
KPIs (Key Performance Indicators) are the important numbers you need to measure to check the health of your business. They’re like the heartbeat and blood pressure of your company. They need to be at healthy levels and within a certain range, or big problems develop. In wholesaling (and fix and flip, etc.), common KPIs are leads generated, contracts entered into, sales closed, profit made, etc.
Core Values are those ideals or desired behaviors that are important to how you run your company. They can be anything from integrity to honesty to family or anything else you want as part of your culture. The Core Values guide your company’s operations; think of them as the guiding principles of your business.
KPIs Should Be Used Daily
KPIs should be used daily. Why? Because these are the two major indicators for the health of your business. And if you don’t look at them daily, you may not see negative actions happening until it’s too late to stop the adverse results they create. Ignoring your KPIs is like navigating across the country without a map — you may get to your destination, but likely take many wrong turns, go the long way around, or you may end up in the wrong place.
Monitoring your KPIs gives you an instant snapshot into the health of your company’s operations. You don’t have to look at 23 statistics every day (but feel free if you like); just pick a couple that are crucial to your operations. For example, checking leads generated every day will reveal if a change in lead volume develops. It takes time for marketing to generate leads. If you don’t watch your incoming leads daily, you could find yourself with few leads in three weeks. Then it’s too late to adjust marketing or other actions, and you waste even more time getting things going again. Time you’ll never get back and opportunities lost.
Watching your KPIs can also alert you to struggles occurring in any given area, and especially with specific employees. If an acquisitions agent is falling behind on sales targets, what do the KPIs look like? Is he making enough calls? Is he getting enough leads to call on? Is he in the wrong seat? Does he need more or better training? You can identify the issue quickly, address it with the employee, and solve the problem. If you’re not following your KPIs, this employee could spend weeks not producing and hurting both you and the company.
Another huge benefit of watching your KPIs is that you remove managing by feel, which often can lead to wrong decisions. Instead, you’re now managing by statistics (or managing by KPIs). You take actions (or not) based on what the numbers tell you. This removes guesswork and uncertainty because you know what is happening. So if a KPI drops precipitously, you can find out why quickly and correct the situation.
Core Values Set the Tone
Core Values run your business, even if you don’t realize it. These are the things that you hold dear in how your company operates — how you treat your customers, employees, and resolve problems and disputes. Traits like honesty, family, faith, or any other guiding principle you use.
Think of Core Values as similar to a mission statement of a company. Where mission statements can be full of fluff and buzzwords, Core Values are those things that are important to who you are and how you want your business to behave. They describe the soul of your company.
Core Values are not just something that you write down and file away. They are the foundation blocks of your company. Everything you do is built on your Core Values, and every decision you make must be made with them in mind. Ignore them at your peril, because decisions that go against your Core Values will create chaos within your business.
One of the most important times to use your Core Values is hiring employees. You need to have people who fit your Core Values. If they do not, at some point they will become disillusioned with your company and leave, but not before they crash your KPIs and in general cause chaos. Don’t try to force square pegs into round holes.
Hiring someone who does not share your Core Values is a recipe for low KPIs from that position. The inevitable conflict in how they perceive their job versus how you want them to make decisions and perform only grows over time. Your Core Values absolutely must be woven into your screening and interviewing processes. Don’t justify hiring someone who otherwise seems highly qualified if they do not fit with your Core Values — the end result is that they won’t be around long, and they will probably drive your KPIs down while they are still there.
Always on My Mind…
KPIs and Core Values should always be on your mind. You should make it a daily habit or even part of your daily schedule to review them, both yourself and with your employees. It can be quick, even part of a brief morning muster meeting.
Focusing on KPIs will force you to make decisions based on the data, not emotion or feelings. Keeping Core Values in the forefront will ensure that your company stays true to the ideals you hold important and you will surround yourself with people who believe as you do. Let either of these principles fall away and watch your company struggle.
The good news is that focusing on these key items will make your business grow. They will also make it a more enjoyable place to work. Once you have them built into your routine, good things happen.
If you need some help in defining your KPIs or Core Values, we can help. Visit http://www.disruptors.com/help