Every business is unique, metrics need to be tailored to the company to reflect the company’s unique goals, context and challenges. That said, there are certain metrics which should be monitored as a minimum by any business. These essential metrics are all aimed at ensuring the owners of the BAM company are able to answer for themselves the key questions:
- Are we doing what we set out to do?
- Are we being responsive to God’s call and the Spirit’s leading?
- Do we have the cash we need to operate and meet our commitments and is it likely that we will continue to be solvent in the coming year?
- Are we being good stewards of the money that has been invested with us?
- Are we caring for and developing our employees?
- Are we damaging or helping the environment?
Not every business needs dozens of charts and numbers to answer these questions. In many cases the answers will be obvious. However, a few carefully selected, measured and reported metrics can help bring clarity. The following list contains recommendations for how to cover these questions.
Basic Profit and Loss statements and Balance Sheets: These are preferably issued each month and should honestly reflect the entire business. Note that in many countries the legally mandated statements are inadequate for managing. Good management accounts are essential.
Cash flow: Many companies fail while they are making a profit. Cash determines survival more than profitability, at least in the short term. Every manager should know what cash is going out of the business and what cash is coming in for the next couple of months.
Analysis: There are a number of key analyses that should be done on the financial data so that you can understand the dynamics of the business. These would include gross margins and administration as a percentage of sales, at least. A manager should know these figures and be aware with how they are moving over time. Preparing the Financials is helpful, but analyzing them brings value!
In many businesses new product development is essential for ongoing survival. In such cases a key metric will be the status of new products being developed.
Operations will include the execution of orders or the preparation and delivery of goods and services. Management needs to be sure that these are being done well and at least some measure of quality should be in place.
People care and development
We work with and through people and the Bible gives many instructions to those who manage others about how they should be treated. Management should be able to know that the staff is being properly compensated, that salaries are being paid on time, that working conditions are good and that the staff is being encouraged to grow in their personal and professional skills. This could lead to a broad array of measures in place, or could be summarized in a periodic discussion with supervisors or employees.
At the very least company management should be asking on a regular basis the question “Are we being the people and the business God has called us to be?” The discussion of this and a brief note about the results is a good metric that will allow you to look back over time and identify when you are doing better and when you are not—and, just as importantly, when you were too busy to stop and ask the question.
Environmental and social responsibility
Similar to spiritual impact, management should at a minimum periodically reflect on the question, “Are we operating in a way that reflects God’s love for His creation and that will help to transform this society in the image of His Son?” There are many other measures that would fit in different businesses, but a regular discussion with a brief note to document it can do a lot to keep the company focused on these areas of stewardship.