I believe in supporting Black-owned businesses...with money. I go out of my way to spend my dollars in Black-owned establishments. Some people have told me that this isn’t fair to other businesses.
I compare my passion for supporting Black business to the passion that an emergency room doctor has for their patients. Yes, there are lots of sick people out there that need help. There are people who have dire injuries and need help right this second. There are also people who just require an annual check-up. All of these people need care; however, the intensity of their care will vary depending on the urgency of their trauma. I spend my money with Black-owned establishments because the data shows that these businesses require urgent care in order to ensure their survival.
Imagine if 41% of the country’s population dropped dead.
As of September 25, 2020, 41% of Black-owned businesses shut down as a result of the covid-19 pandemic. If this statistic were talking about human lives, then I think medical professionals everywhere would take urgent action, no? Luckily, I’m not the only one who has recognized the severity of this shocking fact. Many people and companies are choosing to support Black-owned businesses by offering grants to business owners. There’s a lot of thoughts around the genuine nature of this newly available money. I could write a completely separate post about whether these efforts are genuine or performative; but I want to focus on one thing and one thing only: getting this free money. We’ll address the sociopolitical implications at a later date.
In order to obtain grants and other outside capital, you have to be able to convince the people that hold the purse that you deserve the money. You have to show them how you will use the money and how using the money will immediately cause improvements within your business. How do you prove all of this? Let’s stick with my ER analogy, shall we? If you were to walk into an ER with an excruciating pain in your stomach, the first thing the staff would do is make you fill out a mountain of paperwork in the waiting room while watching old episodes of Judge Judy. I mean...they would immediately take your vitals: blood pressure, temperature, heart rate, and respiratory rate.
These are core vital signs meaning that any abnormalities indicate that there is an urgent problem or it could indicate that doctors have some time to run some additional tests. It’s called triage (/trēˈäZH/). This is a system of analysis that allows medical professionals to objectively assign degrees of urgency quickly and with the least amount of error.
Managing your business should be the same way. You need to determine the key vital signs or key performance indicators (KPIs) for your business. KPIs indicate if your business is healthy and performing the way that it should. If those numbers are off, then you immediately know something is wrong and you can assess the urgency of the situation. People on the outside can help provide the care (read: piles of money) you need and you can decide the most effective way to use it to get your business back on track.
What are key performance indicators?
So, what are KPIs?
They are benchmarks or expectations for how something is measured. Ultimately, they are data. Data has a broad definition; but most people consider quantitative or numbers-based data the most important for conducting business. Here are some examples of data:
Data are numbers at face value like counts (i.e. your company has 10 employees) or size measurements (i.e. your office occupies 12,000 square feet of space).
Data can describe the relationship between numbers. For example, women make up 65% of your total staff (percentages) or employees with a 4-year degree are 2 times more likely to be in a role managing others at your company (ratios).
Data can describe how something has changed over time. For example, your sales revenue has changed by +$100,000 over the past year. The difference in a measurement across a specific period of time is called the delta. It can indicate progress, regress, or stagnation.
In all of the above forms, the data won’t mean anything until it is analyzed and compared to a benchmark. That benchmark could be your company’s past performance or it could be set by the competitors in your industry.
Why is data important?
Data has a reputation of being objective. Anybody that’s watched MTV knows that men lie, women lie, numbers don’t. But that’s not entirely true.
For the most part, that’s true. We all learned the same math in school (or at least I hope we did). We all know that 1+1=2 (or at least I hope we do). That’s because math is finite. That’s why data is important. It doesn’t matter your religion, nationality, age, or favorite Marvel character. When you add 1 and 1, you will get 2! But like some Marvel characters, numbers have a dark side. Data gets complicated when it’s interpreted. See, we use data to validate or invalidate what we think, feel, and experience; and there’s this little thing called confirmation bias which means humans seek out information with the sole purpose of proving themselves right. This makes total sense because most people don’t intentionally go looking for proof that they’re wrong. It’s this need to feed our fragile, little egos that gets us into trouble when looking at data related to our business. Yes, data is one of the utmost important components of running a business. However, it is only as important and informative as you allow it to be.
So, what should I measure?
It depends on what’s important to you and the people who support your business.
Mission/Values: Ask yourself, “What does it look like for my company to fulfill our mission?” How many purchases does that equal? How much sales revenue? If you’re a non-profit, maybe you measure impact in a non-monetary way such as participation in a program.
Short-term goals: What are your business goals for this fiscal year and the next? Do you want to grow new customers or increase repeat purchases? You always want to be moving toward your long term vision, but you need to set checkpoints in the form of short term goals (annual, quarterly, monthly, weekly).
Audience: Is your goal to attract new customers? Then you need to impress your target demographic with meaningful data points that will drive them to make a purchase. If your goal is to seek venture capital in the near future, then you should start collecting data that shows how rapidly your company is growing profits and cutting costs. This group will be interested in how soon they can get a return on their investment.
Competition: There is no need to reinvent the wheel. Look at what metrics your competitors are publishing and then publish those same metrics. The goal is to show customers and investors that you can outperform the competition and you can’t do that by comparing apples to oranges. You have to show an equivalent comparison.
Ok...keep talking.
Once you know what you’ll measure, you need to draw a line in the sand that separates good performance from bad performance. When your body temperature drops below 95 degrees Fahrenheit, doctors know they have a problem *cough*hypothermia*cough*. This is a benchmark. Your benchmarks will either reflect how you want to perform compared to yourself or to others. The key is that you need to know how your competition is performing, even if your competition is yourself. This requires research. Next, you’ll want to draft some guidelines to course correct or fix the problem once it’s discovered. This can take some trial and error. I’m sure a lot of mistakes were made when doctors realized that you can’t just put someone with hypothermia into a hot bath. You have to warm them slowly starting with blankets. Maybe your business is the same way. You may do more harm than good if you implement a solution to fix an issue too quickly. Last, but certainly not least, you need to identify the tools and technology that you’ll use to measure the KPIs you have chosen. It’s really hard to measure someone’s temperature without a thermometer. I don’t think anyone can translate “cold-ish” into degrees Fahrenheit. Using tools and templates helps to ensure the data is captured the same way each time.
When do I collect the data?
How often do you see a doctor? The answer is the same for data collection: it depends on how you feel. If you have a known health issue then you probably make frequent doctor visits so they can keep a close eye on how your body is functioning. If your business has a current issue or an issue has recently been resolved, you might want to keep a close eye on it. The key is making it a habit. I still get a check-up in July. This started when I was in school because it was a requirement for enrollment. I haven’t been in school for almost a decade, but I still operate based on old habits. You have to set a formal date and time for the data to be collected and discussed; and you have to stick to it!
What do I do with the data?
Analyze it. Duh!
A lot of people interpret data on their own. This has its problems. Remember when I talked about confirmation bias? Yep, that’s it. That’s the problem. Sometimes you need to tell other people what you think and the data you have to support your thoughts. It’s important that you check yourself before you wreck yourself...and your business. This might seem scary because nobody wants to be wrong or look like a fool. That’s why it’s equally as important that you create a company culture that focuses more on curiosity and embraces failure more than it praises being the rightest and brightest in the room. Data is only valuable if you can compare it to a lived experience and your personal lived experience is not the only perspective out there.
Speaking of lived experiences…
We’ve talked a lot about quantitative data, but there is a lot of value in qualitative data. Don’t discount your gut instincts! Don’t invalidate what your employees think and feel just because the arithmetic doesn’t line up. Yes, it’s important to make decisions that are unbiased; but humans are complex and even quantum physics can’t compare to how we experience the world around us. A true data-driven leader is able to find a balance between the math and the mind.
Moral of the story...
Being a data geek has a lot of benefits. It will enable you to make quicker decisions that are more effective and beneficial for your wallet as well as your staff. It can help you tell an impactful story in loan applications, venture capital pitches, or during conversations with potential donors. It shows your commitment to continuously finding ways to improve and fulfill your mission. Being able to spot trouble on the horizon can save you money by indicating trouble with productivity or showing that you are bleeding cash. Data is all around us. Our five senses were designed to assist us with capturing data so we can figure out whether to fight or flee. You should design your business to do exactly what the human body is programmed to do: sniff out danger as soon as possible and pivot.
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