Since I’m the one who loves to measure things, it’s become my role among my business partners to track our business metrics. I enjoy keeping data, analyzing it, and reporting on it, but time after time I am reminded of why I’m better off having a financial adviser taking care of my investments: I lack patience.
Take our company’s last month for example. Early on in the month the numbers were looking pretty good. We were on track for a better month than the one before. But by mid-month things were appearing to slow down. Going into the last week of the month I was beginning to think we were going to have our first month where we sold less than the preceding month.
The last week really kicked butt, with six strong days in a row, and we handily beat our previous month’s sales. I suddenly felt a bit embarrassed by my pessimism the previous week. Especially since it was not something new. We’d had similar weak-strong cycles previously.
Just like wise investors invest in the markets for the long-haul, businesses should look more at long term trends rather than short term performance. As frustrating as a slow day or week may be, one should not let emotion run the show. Maintaining a higher level view and long term perspective can help you avoid over-reacting.
Not that a case of nerves now and then is entirely a bad thing. After this latest low-high business cycle I decided I needed another metric. Though I’ve found it useful to look at our average sales throughout the month, I’ve now taken it a bit further and added a standard deviation analysis to give me feel for just how much volatility we experience day to day.
To my surprise, last month showed the lowest volatility in four months. Yes, our daily highs were not as high as they had sometimes been in the past, but our lows were not as low, either. The latter helped make up for the former, and produced a solid, steady month without my realizing it.
This is also not to say that one cannot be too patient. It is just as dangerous–if not more so–to stubbornly hold the course long after the data has truly begun to indicate problems. Waiting too long to acknowledge problems and correct them can be dangerous to a business. A slow week, or even two slow weeks, may not be indicative of a real problem, but a poor month or more might just be a warning sign.
So don’t get too caught up in the daily ebb and flow of business or you’ll go nuts. But also don’t relax too much and fail to notice danger signs. Work for that “sweet spot” of having your finger on the pulse and both hands on the wheel. Just know, too, that it’s often easier said than done.