Tag Archives: expert

Using Metrics

One of the primary benefits of setting goals is that having a clear goal lets you figure out whether or not you’re making progress. Which is true, as far as it goes — I set goals last year for our first annual planning session, and there’s no doubt that I have made a lot more progress over the last year than I did the year before. But I’d like to be able to say with more certainty how much progress I’ve made.

Enter Metrics

When you’re ready for the next level of tracking your progress and reaching your goals, it’s time to start using metrics.

Metric is from the Latin word for measure, and in this case, it means simply that: measure what you’re doing. If you set SMART goals, then your goal is already measurable, you simply need to actually measure it. Otherwise, you need to sit down and make your goal SMART (Specific, Measurable, Achievable, Relevant, and Time-Bound).

Selecting Metrics

For each objective you have, figure out what you could measure to determine if you’re making progress. In some cases, this might be really obvious: if your objective is to lose weight, then clearly you want to measure your weight. In other cases it might require more creativity: if you want to improve your relationship with your partner, you might need to get more specific (“I want to have fewer fights”) or to select a set of metrics for this goal (“Number of fights” + “Number of positive interactions” + “Time spent together per week” + “Subjective assessment”)

For each metric, jot down the following:

  • Why this metric matters
  • How this metric will be used
  • Tracking methods to measure effectiveness
  • How data will be captured

For example, for the losing-weight objective, you might write down:

    Metric: My weight
  • This metric matters because none of my dieting and exercise matters if I don’t actually lose pounds
  • Add each weight measurement to a graph, so I can see the overall trend.
  • I will weigh myself once a week, on Sunday, before breakfast.
  • I will capture the data using my bathroom scale.

When I had an objective of keeping my temper under control, my metric was how many times I lost my temper per day (yes, multiple times per day!) My list would have looked something like this:

    Metric: How many times I lose my temper each day
  • This metric matters because I’m trying to keep my temper, and how often I lose it is a good measure of whether or not I’m succeeding
  • Compare average temper-loss-per-day month to month.
  • Write down how many times I lost my temper today on the calendar, so I have an amount for each day.
  • Wear a length of chain around my neck, and tie a knot in it every time I lose my temper

Using Metrics

Once you have a metric, and have determined that it’s a good metric for helping you achieve your goals, and have determined how to measure it (and how often), the next step is to actually do that. Monthly and weekly goals can be reviewed at your monthly planning and weekly planning. For daily goals (and especially things where you’re likely to have some fluctuations, like weight or spending or keeping your temper), it’s often helpful to have a graph, so that you can see the overall trends. If you have a “Do/buy/sell/earn this much stuff” type of goal, one of those thermometer-style graphs like they use for fundraisers may be helpful.

Whatever you choose, I do recommend keeping your metrics out in front of you. The more you see them, the more likely you are to act on them.

Resources For Further Reading
Annual Planning

The Role of Finance

Finance and accounting is one of the most intimidating areas of business. Even setting aside that numerical literacy sucks in US education, and so you may be a total arithmophobe, the long columns of numbers and arcane terms can be confusing even to someone who majored in applied mathematics (like me). Have you got the numbers right? (How do you tell?) If so, do you know what they mean? (Um..) Are you sure you know the difference between net revenue and earnings and profits? (I don’t).

The part of finance you have to care about

There’s a very good reason (no, really!) that Fortune 500 companies are required to do their accounting by Generally Approved Accounting Principles, by which they mean “all that complex and arcane mess you see on a standard Statement of Cash Flows.” Because Ford and Toyota are required to calculate Gross Revenue and Net Revenue and Profits and Earnings Per Share in exactly the same way, all of us can look at their financial disclosures and determine which company is actually doing better. (Want to place bets?)

But you are not a Fortune 500 company. You are not a publicly-held company. You can keep your books in any way that makes sense to your shareholders — which probably means, to you.

The purpose of finance and accounting is to answer one very basic, very important question:

Am I making money or not?!

All you have to do is enough accounting to be able to answer that questions.

The Three-fold Benefits of Finance and Accounting

Actually, the “finance department” (that’s you and your calculator) has three roles, each of which involve answering variants on that question.

Am I making money? Financial Supervision

It’s easy, especially in a business with high upfront costs, to feel like you’re making money when you actually aren’t. Say you pay $100,000 to open a new restaurant. And each month you make $10,000. Whoopee! Except…. you’re paying $2000 in rent and $5000 in raw materials and $2000 in salaries and….

How much money did I make? Financial Assesment

Unless you’re lucky enough to live in a country that doesn’t collect taxes from businesses (and I don’t think there are any), you’ll have to tell the government how much you made during the previous year. And you’ll have to convince them that you’re telling them the correct number. So your financial department should be able to produce that sort of report.

How much money would I make? Financial Projection

The third role of the finance department, often under-utilized by small businesses, is to help you with decision-making. When you’re deciding between two (or more) routes, make some guesses as to what would happen, and plug those numbers into your financial statements. What would your business look like in a year if you chose this route? What would it look like in 2 years? 5 years?

This method can help you avoid spending too much money at a time and getting yourself into trouble down the road.

Resources for Further Reading
No Frills Accounting — This is the spreadsheet I created to track the very basics of your financial situation. It’s a huge spreadsheet (there’s a lot of number-crunching going on in there), but it does what you need it to do.

How to Brainstorm – tips

I’m really not sure if I’m the best one to be writing this post, because brainstorming comes really naturally to me. I love coming up with new ideas, and I love playing around with existing ideas to come up with new combinations. Ideas are just pure awesomeness to me.

So I don’t know if I can tell you how to brainstorm. But it’s an important thing for an entrepreneur to know, so I’ll see what I can do.

Define the Problem

This step isn’t strictly necessary, but it will make your brainstorming a lot more effective. What, specifically, are you brainstorming? I prefer to write at the top of my record (see below) what it is that we’re looking for, eg “Ways to make money from this skill” or “What else would you like to see on this site?”

Don’t Judge

A lot of the ideas you come up with will be terrible. A larger percentage of them will be OK, but not stellar.

There is no way around that.

You cannot brainstorm if you are intent on only having good ideas. It cannot happen.

It’s a little like cleaning out your garden hose in the spring. There’s fresh clean water in the tap, but the only way to get it coming out the hose is to blow out all of the air and the dirty water.

So it’s important to just write down every idea you have, even the ones that are obviously of no use. (Brainstorming ways for my cousin to monetize herself, I wrote down “give people hugs”.) If you’re analyzing enough to determine that it’s a bad idea, you’re judging too much.

And related to that…

Go for Volume

I read an article several years ago about an art teacher who decided to try an experiment. One of her pottery classes was told that they only had to turn in one pot, and they would be graded on the quality of that pot. The other class was told that they would be graded on how many pots they produced; quality was not a factor at all. So class 1 spent all semester working on one pot, to make it as good as possible. Class 2 spent all semester making pot after pot after pot.

The result? Class 1 made some pretty good pots. But class 2 made better ones. It turns out that quality is better than quantity, but… quantity selected for quality trumps both of them.

Later in the planning process, you’ll select for quality. For now, just aim to get lots of ideas. Seth Godin recommends trying for 111.

Get a record

I’ve done this before, and it feels awful: you get excited about brainstorming, and you get tons of good ideas, but you don’t write them down. The next morning, you can only remember 4 ideas, and two of them are lousy ones.

How you choose to get a record is up to you. Since one of my brainstorming team is 1000 miles away, we do our brainstorming online; everyone has to type their comments anyway, and the transcript of the conversation is our record. Using a wiki or Google Wave means you can sort your comments as you go, so that you have an organized hierarchical record of all your ideas.

Less cutting edge but just as effective is an audio recorder. You may have one of these built into your phone; otherwise they’re not terribly expensive.

At the stone-age level (but in some ways better than the audio recorder) is to have someone writing everything down on a whiteboard, overhead, or piece of paper. This method allows everyone to see what’s going on, to review what’s been said so far, and you can organize your ideas as you go with mind mapping, headers, or whatever seems best to you.

Next Step

What the actual next step is depends on what you were brainstorming for. But in most cases, you’ll want to look down the list, and discuss which idea(s) are worth keeping. In some cases you’re only looking for 1-3 ideas; the rest will be discarded. In other cases (like deciding how to monetize yourself) you’ll pick 1-3 to implement right now, and keep the rest of the list for later.

Resources For Further Reading
Step-by-step guide to brainstorming

Is It Evil To Make Money?

There’s a pervasive notion in our culture that being rich automatically means being sleazy, greedy, and uncaring (and admittedly Hollywood residents don’t help a lot with dispelling that stereotype). There’s also a pretty strong feeling among many people that not working for your money makes you bad or greedy or lazy.

If you strongly believe in not making money, I won’t try to change your mind; I strongly believe in letting people decide for themselves. But I’d like to other some alternative points of view that might help you in deciding where you stand.

Money Myths

Any time you argue with a belief that’s widely held in society, you have to call it a myth; that’s the rule. But in fact most of these ideas have a pretty sound basis. None of them are 100% wrong. But I think many of them are overgeneralizations, and I’d like to point out some distinctions that I think are important ones.

Money Is the Root Of All Evil

Actually — if you look in 1 Timothy 6:10 — you’ll find that what Saint Paul said is that love of money is the root of all evil. Money itself can do good things or bad things — the church collects money, after all — but to love money, to desire it for its own sake, and especially to love it more than God, more than people, more than goodness, more than virtue… that may not be the root of all evil, but it is the root of a whole lot of it.

On the other hand, loving most things is good. If you love your kids and want to send them to college — wanting money for that is not evil. If you love your partner and want to make sure they’d be safe even if you were hit by a truck — wanting money for that is not evil. If you love 3rd-world countries or inner city kids or spotted owls or cancer victims, and want money to help them get out of their bad situations — wanting money for that is the opposite of evil. So I think it’s an important distinction.

Why do you want money? What would you do with it if you had it?

Making a business is less work than getting a job

Owning a business is less work than getting a job once the business has been built. But my experience so far suggests that actually building the business is as much work as 40 years’ worth of employment, rolled into one decade. Certainly it’s much harder work.

At my day job, all I have to do is show up, do what my boss tells me to, and be average enough not to get fired.

In my business I have to motivate myself, plan where the business is going, decide the most important thing to do today, and be good enough to compete with every other business in my industry, including some really big companies. I must have or learn self-discipline, organization and planning, and prioritization, as well learning enough in my field to excel at some aspect of it.

It’s a lot harder than my day job. But I love it. It’s work that challenges me. It’s work that makes me a better person. And I hope that it’s work that makes a difference, that by my writing this blog, making my time management website, I can make some people’s lives a little easier.

What kind of work do you want to do? How much are you willing to do?

Power Corrupts

This one is the most true of all. It’s very easy to take advantage of having power — any kind of power, and money is a great example — to do things that you wouldn’t if other people had the courage to scold you for it. And it is a risk of being rich; we see it all the time in our tabloids.

But you can also abuse power without being rich. Being promoted to manager was a test of power and character for me; would I use it to force my coworkers to do things my way, and to do the grunt work I didn’t want to do? I made a few bad decisions; but getting the promotion, and seeing the results of those bad decisions, has made me a stronger, better person. Losing my temper was no big deal when it only affected me; learning to keep it was much more critical when it had the power to affect half a dozen people who I liked and respected.

“Nearly all men can stand adversity, but if you want to test a man’s character, give him power.” — Abraham Lincoln

What challenges would face you if you were given power? What would you have to change about yourself to be able to handle it? Would you be a good leader? What would have to change for you to be able to say yes?

Other things to consider

Most Men Live Lives Of Quiet Desperation

Thoreau went to the woods to live deliberately, away from the prejudices and preconceptions of society. And one of the things he found there is that, when you take a look at it, most people are pretty unhappy with their lives, due in large part to money or lack thereof. Or, to sum up middle-class America succinctly: most people go to a job they hate so they can spend money they don’t yet have on things they don’t need to impress people they don’t like.

And living like that is crazy. Everyone knows that, at some level. Blogs like The Simple Dollar and Zen Habits help you with this problem by helping you recognize which expenses can be cut from your life without problems; blogs like Itty Biz and Personal Development for Smart People offer advice on making more money without going to work every day. But everyone agrees that you need to do something.

What would you do if you didn’t have to go to work, ever again? It’s all very well to say that you’d play golf all day, or lie on a Caribbean beach. But you know as well as I do that you’d get tired of that after… oh, say, a year or so. And you’ve probably got more than a year left to live. What would you do when you got tired of doing nothing?

Why not make your dreams come true? Live the life you always wanted… whether that’s helping kids learn baseball or making stained-glass windows or discussing holy books with learned men. A life that you want. A life that means something to you. Instead of quiet desperation.

What WOULD you do if you didn’t have to go to work?

You Could Make A Difference

Odds are good, actually, that you have a secret dream, so deep down that you may never have admitted it to yourself, where you make a difference in this world. The particulars will vary from me to you to Bob Gomez over there, but you dream of doing something that matters… maybe writing a history or philosophy book that clarifies everything, or working for your church, or volunteering at the soup kitchen 5 days a week, or traveling to poor countries and helping people get by, or making a difference in government, or….

If you didn’t have go to work every day in order to get money, you could do that.

What could you do to make a difference in this world if your job didn’t get in the way?

You Don’t Have To Keep It

If worst comes to worst, and you just cannot bear the thought of making that much money, but the idea of building a business still appeals to you….

give it away. There are plenty of people who will take it; you can give it to bums on the street, or worthy charities, or to me, if you’d like. (I’ll use it to build my business so that I’ll have time to help save the ethnosphere.) If it turns out that you’re not trustworthy with that kind of power, get a financial manager who will give most of your money to designated charities and dole out a small amount to you each month (it’s worked for British aristocrats for years).

So, is it evil or not?

I can’t answer that question for you.

I don’t think it is. I think that accepting a job that is less than I can do, to create less benefit than I am capable of creating, and in turn preventing both my selfish dreams and my dreams of helping others… I believe that’s evil. And the opposite of that: following my dreams, educating myself to do the best job I can, to build a business that will help others — in turn — follow their dreams… I believe that’s good. But you have to answer for yourself.