What does calorie counting and running your business have in common?

 

 

 

 

Please bear with me for a moment.  This will make good sense to you.

Here are the facts:  two guys that both weigh 175 pounds get on a treadmill and run 3 miles.  One guy is in great shape, runs the 3 miles in 18 minutes and his heart rate doesn’t go past 130 BPM.  The other guy is in OK shape, runs the 3 miles in 27 minutes and his average heart rate is 143.

My question is who burned more calories?

The answer is they burned the same number of calories.  Here is the formula:

kcal (calories burned) = METS* times weight (in kilograms).

*METS are the energy cost of physical activities.

Contrary to conventional wisdom, time is not a factor in calculating calories burned and neither is heart rate or effort.  The only two variables are work (METS) and your weight.

You probably did not answer my question correctly – or maybe you guessed the answer.  At a cocktail party, right or wrong based on an intuition is not costly.  Where guessing wrong can cost you a lot is in your business.  And that is my point in this post.

Every day, struggling business owners are telling me that their business has trended up, this customer is very profitable and that direct mail campaign has really paid off.  And not one of these business owners knows this factually.  It is an intuition or, more likely, a hope.  This is not the way to run your business but is how I see most business owners making their important decisions.

The successful  business owners are reading this post and smiling because they know you must  have facts – accurate and timely – to make good business decisions.  Over time the quality of your  business decisions are what make you hugely successful, mediocre or a failure.  The successful guys know that you do not rely on instinct when the facts are available.  They know you use your gut instinct to test a concept, try something new.  But it has to be measured.

Here is a conversation I had last week with a potential client:

Client:  My business would be fine if I could borrow $75,000.

Tom:  What would you do with the money?

Client:  Pay some bills that are past due so I can buy more materials.

Tom:  What’s your cash flow going to be like in September?

Client:  Huh?  What do you mean?

Tom:  You say you need 75k.  But if you don’t know what your cash needs are going to be in September, how do you know 75k is what you need?  And why is cash tight right now?

Client:  The economy has hurt my business so cash is tight.  it’s like that everywhere.

There was quite a bit more to the conversation but you get my point – this business owner does not have a good grasp on his business.  One of my later questions was:  Are there other companies in your industry that are kicking butt and making money hand over fist?  The answer was yes, of course.  That question  is what finally got me through to this owner.  We need to first know the facts, then evaluate the facts then make decisions based on those evaluations.  He was on the brink of failure because of his actions.  Cash flow problems were a symptom, not the problem.

We will all have to make decisions based on our gut instincts.  But this cannot be a standard operating procedure.  If the facts are there – what will our cash flow look like for the next month – then we should gather those facts.  If we are using our instincts to commit to a $5,000 radio advertising campaign, then we need to first define our expectations then measure them once we have the results.

Six years ago, most of us were printing money because everything was so easy.  Today, the economy has forced us to be better business owners, better decision makers.  It is within us to do this but we first have to buy into my argument:  make decisions based on the facts.  Don’t you want to be one of these very successful business owners  in your industry  that is smiling TODAY because things are running so well.  It’s there for you.

Have a great day.

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