Numbers to manage toward.
WHAT MAKES A TARGET USEFUL
Specific Within your influence Measured regularly Connected to a decision
WHAT TARGETS TO CONSIDER
Revenue Gross margin Fixed cost ceiling Cash balance minimum Collection period Profit
WHY A CASH MINIMUM
It forces action before a crisis rather than during one.
WHAT TO SET IT AT
Enough to cover committed costs for a period.
WHAT TO DO WHEN IT IS APPROACHED
Act, according to a plan decided in advance.
WHAT THAT PLAN MIGHT CONTAIN
Which spending stops Which receipts are chased What facilities are drawn
WHY IN ADVANCE
Decisions under pressure are worse.
WHAT TO AVOID
Targets nobody can influence Too many targets Targets that conflict
WHAT CONFLICTING TARGETS LOOK LIKE
Growing revenue while reducing marketing spend.
WHAT TO REVIEW
Performance against targets, monthly.
WHAT TO DO ABOUT PERSISTENT MISSES
Establish whether the target was wrong or the performance was.
WHY BOTH ARE POSSIBLE
Unrealistic targets demoralise and get ignored.
WHAT TO SHARE WITH STAFF
Whatever helps them make better decisions.
WHY
People cannot manage toward numbers they never see.
WHAT TO BE CAREFUL WITH
Targets that reward the wrong behaviour.
WHAT EXAMPLE SHOWS IT
Revenue targets producing discounting that destroys margin.
