Department for International Trade’s dedicated team of International Trade Advisers have a wealth of knowledge and experience working with businesses and are on hand to offer free and impartial advice on your export strategy. In true Dragon’s Den style, International Trade Adviser, Paul Garnett, highlights the benefits of knowing your metrics for successful exporting.
How do you know when you have had a good day?
Simple question eh? I often ask this when I meet business managers and entrepreneurs for the first time. More frequently than is comfortable, one of their eyes goes left, the other goes right, and they mutter something about sales turnover. More over, when I ask how many people they employ a lot of thought goes into their reply. Nothing wrong with that, I’d encourage reflective thought and a carefully measured response, particularly when they are employing upwards of fifty. However, when the answer comes back as five, it does raise some concerns that the key decision maker might not be on top of the numbers.
So what is important to you? If you don’t measure it, then you can’t improve it.
Investing in an export project should be no different than a justification for capital equipment. You should require, demand even, a payback. Clearly risk is involved; you might not make the sale or the payment may be delayed. But hey, you are an entrepreneur, the ultimate definition of someone who is willing to take a risk. A common misconception is to confuse entrepreneurism with lack of organisation and planning.
An understanding of what is really important to you is vital to determine what practices you need to deploy to improve performance. For example, if you are a manufacturer that sells from stock, then the level of stock you need to keep is dictated by the time required to replenish it. That means a need for short throughput times which in turn means small batch runs and this necessitates short set up times. So what is your average set up time? If you manufacture a limited number of product lines and capacity is an issue then how often a machine is running is running and making good product is what is important to you. So what is your overall equipment efficiency? If you don’t know it, how do you know if you need more machines?
Just take a look at football and the analytics used by managers as one way to measure player effectiveness. I’m not advocating fitting your employees with GPS trackers (tempting I recognise, but frowned upon by most HR managers) but accurately measuring key business metrics and having the capability to review these in real time just might be beneficial. I guess there is a benefit of NOT taking any metrics and that is that failure comes as a complete surprise and is not preceded by a period of worry.
What has all this got to do with successful exporting? Well putting a few thousand miles on your supply chain never improves competitiveness. Likewise competing on price is inefficient in the long term, competing on cost is more relevant and the cost base is just one important factor in long term competitiveness.
So what is your turnover? Better question. What is your gross margin? Better question.
How do you know you have had a good day?
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