The Ernst & Young Business Plan Guide, Third Edition

Chapter Twelve. Major Milestones

There is a phrase in business that suggests that metrics create behavior—“What gets measured gets managed.”

We all have a great deal of experience with metrics. From infancy we are all measured. When did we walk? When did we say the alphabet? In school we all were measured against our peers and against grade-level skills that should be acquired. We also have experience with measurements altering our behavior. Our grades in school may be an example. Did they make us work harder or better?

In our business at Ernst & Young we struggle with metrics all the time! If our measurements are not comprehensive, measuring many things other than just bottom-line results, we do not maintain the balance we need. We measure retention of executives, community activities, and a hundred other things.

A new business has to have ways to measure, too. Potential customer contacts, sales calls, and sales themselves are ways of measuring different activities in the sales cycle. All are important to creating the behavior that creates the sale. Customer satisfaction measurements are important to maintaining long-term relationships. “The good news about metrics is that they matter,” business pundits say. And “the bad news about metrics is that they matter.”

The point entrepreneurs must remember is that metrics that facilitate and measure progress go well beyond the simple, short-term financial metrics. The more effective and directed toward the factors that show long-term success ...