As regular readers would be aware, I am an enthusiastic fan of objective measures. All businesses should know their smart numbers, and set targets to assess progress towards their “success”. Hence, it is tempting to define great businesses in terms of their metrics.
Some of my favourite performance indicators of great businesses are:
- Business revenue of $250,000 per full-time-equivalent employee
- Two support staff per adviser
- 60 per cent of advisers’ time spent face-to face with clients, potential clients, alliance partners and professional networks
- 80 per cent of the total client base classified as active clients
- 90 per cent of active clients expressing high satisfaction with their relationship.
There is no doubt that businesses that do not achieve quantifiable benchmarks of financial, client and operational performance cannot be considered “great”. However, I also believe that there are some intangible factors that differentiate great businesses.
In the course of my “board of advice” activities, I have the privilege of listening to business owners speaking passionately about their aspirations. Their answers to the following questions are fascinating: “What is important about this business to you?” and “What does success look like to you?”
Core motivation
While there is often a financial dimension to their aspirations, their core motivation springs from qualitative goals. Interestingly, those goals are usually strongly related to their personal values. Here are some real life examples (with names changed):
Frank’s business is important to him because it provides him with a comfortable lifestyle, with both financial freedom and the time to enjoy it. He has a great business because his team are no longer dependent on him and they share his commitment to balance and lifestyle.
For David, success is maintaining control over his destiny and working closely with his team. He has a great business because it is small enough to be managed well and he loves the interaction with his people.
Kevin believes in the significance of what he does. His ambition is to be respected for the difference that he makes in others’ lives. He has a great business because his team share his belief, and respect is a core value for everyone.
Here are two more examples, with real names:
Matt Farrell, principal of 5 Financial at Rhodes, an inner western suburb of Sydney, has built his business around a single cause: “Helping people organise their finances in such a way that brings them clarity and peace of mind”.
He is proud of his success in achieving that ambition; and he is keen to add that he is delighted with his record of “recruiting people who are eager to join our cause”.
Michelle Flanagan, general manager of Genesis Financial Partners in the Sydney CBD, knows that sustainability has always been a core value of her business.
“[It’s about] being financially sound and understanding the sustainability factors for the business to drive an outcome that is rewarding for all parties,” Flanagan says.
“We are no good to our clients or our staff if we are not here to open the doors each and every day.”
The fact that the business has been opening its doors since 1988 is strong evidence of its success.
In my opinion, a great business can provide tangible evidence to demonstrate that its financial, operational, team and client satisfaction performances are first-class. Truly great businesses stand out when the values of their owners have been embedded in the living culture of their business.
These are the best of times to objectively measure the performance of your business – and to assess the extent to which it is also meeting your qualitative aspirations.
