From Chapter 3 of The Savvy Guide to Making More Money
If you're still not convinced that you can make more money by applying the principles in this book, well, then - prove me wrong. Regularly set aside a certain amount of time over a period of reasonable length, apply some focus and effective effort in earnest - and see if you don't achieve something positive; see if you don't learn something that will directly improve your career and home life. Have you ever heard the quip 'It took me twenty years to be an overnight success'? This is the only way to be a success: repeated action, after repeated action, after repeated action, until the 'boom' of a tipping point is produced. People will call it 'overnight' because they can't see the time and effort that went into it. To them, it seems that your success came out of nowhere, when you know all the hard work that it entailed.
The numbers don't lie
On a recent trip to the US, I watched a programme in which a Gordon Ramsay-style restaurant guru was sent to a restaurant to rescue the business. Running the establishment were a husband and wife, working themselves to the bone, and two daughters who never saw them in a good or energetic mood. The restaurant was losing money, and the owners' connection to their 'third child' was a highly emotional one. They took a bull-in-a-china-shop approach to increasing revenue and decreasing costs: they didn't think, they just went and did whatever they thought would prevent the doors from closing.
For example, the wife decided to paint the ceiling a different colour to improve the decor. The husband was buying and cooking in bulk, and serving defrosted food swimming in oil, in an attempt to save money. They were also pushing their catering by offering large discounts (which was proving to be an expensive, time-wasting, loss-making activity). The expert asked the couple what their biggest fear was and they said, 'We don't want to fail our daughters and ourselves.' To which he gingerly replied, 'But you're already doing that.' They both dissolved into tears.
Over the course of the show, the focus changed from revenue to profit, and the team examined how to increase the quality of the food so that they could charge more for it, how to change the items included in the catering offering, how to increase the spend of the customer, and how to build retention. Each one of these improvements led to greater profit and, predictably, by the end of the show, the business was flying and they all lived happily ever after.
When you know what you're actually looking for (i.e., profit, not just revenue), you can measure it effectively (revenue minus cost), and you can develop and execute strategies (as they did in the business on the TV programme); it becomes much easier to apportion your time, effort, money and resources in the way that is best for you and for your bottom line. If you don't have any focus, all of your efforts can result in a diluted, limited effect.
Once you have a clear vision of where you're headed, and you have a series of steps to follow, you need to make sure that things are kept on track, while you're working on a day-to-day basis. KPIs will give you that bird's-eye view of how well your revenue-generating efforts are going. KPIs will allow you to stay on course towards your goal, or to correct course if need be.
The key is to examine the most telling aspect of your activities, in order to find out if you're actually making progress or just trying to convince yourself that you are. One day I was speaking to B&B owner Padraig Sweeney, a great friend of Ardle and mine, and I asked, 'How is business these days?' He told me that revenue was at its best level in five years. I congratulated him and asked about his levels of occupancy. He dismissed my question, and rightly so: 'If I were to bring my price down to €10 per night, I could have 100% occupancy, but that would only serve to make us look good, and our accounts would suffer for my ego. It's really irrelevant.'
So make sure that you measure carefully those elements that will lead to success: if you focus on the wrong indicators, they may tell you a twisted story and conceal a ticking time-bomb. This is why carefully choosing and monitoring your KPIs is not just make-believe for grown-ups; it can make or break your success.