Are You Focusing on the Vital Factors of Your Company?

Reprinted with permission of 
St. Louis Small Business Monthly
August 2007 Edition 

By Ron Ameln

Time is a precious commodity for any entrepreneur. Often pulled in a variety of directions, time-management and focusing on priorities can, in some cases, have more of an impact on your success than sales or marketing.

These thoughts came to mind recently after reading one of the latest business books on the market, "Vital Factors," written by Lee Froschheiser and Paul Chutkow. The premise of the book is simple-business owners are spending too much time on issues that are not vital to the success of their companies. The authors believe every business has three or four vital factors that drive the success of their businesses. These are often hidden components that affect productivity, execution and bottom-line profitability. The authors believe companies rise or fall according to how well they identify and manage these vital factors. While many business owners believe they are focusing on these factors, many are focusing on the wrong issues.

This got me thinking, "Am I focusing on our vital factors? What are our real vital factors?"

I had a recent conversation with a former entrepreneur from the area. After building her business from the ground floor into a multimillion dollar company, she sold her dream and is now living in Southern California. She said if she had to do it all over again, she would have focused on her firm's vital factors. "I used to read spreadsheets every day and look at the numbers every week and month," she said. "They were all just numbers. That wasn't really the important numbers to look at. I should have been focusing on numbers that actually drove the business's success, like number of proposals sent out each week. Those are really the vital factors. I should have focused on the activities that drove those numbers, not just the numbers."

Many of us are guilty of focusing too much on our numbers? After you've seen those numbers, you begin to act, managing the numbers instead of activities. What if one of your top customers goes out of business, how does looking at the numbers help you grow the business? It's not your fault your best client went under. However, if the numbers you check each day deal with generating more and more proposals, those are things you can control and turn into future customers.

The former entrepreneur said these vital factors would have been a great management tool, because what gets measured, gets done. It's much easier to manage activity, rather than results. For example, if your firm's vital factor is five presentations with clients each week, that's easy to measure. An employee is either accomplishing this goal or not.

Once you determine your vital factors, the goal is to spend the majority of your time on the vitals and less time on the trivial factors.

Another example of determining your vital factors is a business owner who understands the importance of building a team of A players. This entrepreneur understands that it takes 200 interviews for him to find one A player for his company. He knows if he continues to find these gems, he'll never worry about his firm's success. His vital factor isn't hiring a great employee, his vital factor is 200 interviews every six months. If he wants to continue adding A players, he knows it's vital to interview many, many candidates and that's how he spends the majority of his time.

Determining your vital factors can be challenging. No business has the same vital factors. In some cases, entrepreneurs are so close to their babies that it's hard to step back and take a big-picture approach.

However, if you can determine the actions that are truly vital to your success, you might discover the solution to improve your business and solve time-management issues.