Growing a business

Episode 9: Performance monitoring and forecasting in business

Anyone who has seen the movie "Moneyball" will understand the importance of measurement and numbers in sports. It describes how the Oakland Athletics, a relatively small baseball team, came from nowhere to win a record 20 games in a row during the 2002 season. The key to its success was data. It used sabermetrics — the statistical study of baseball player performance — to pick a dream team of players that other teams missed.

Another sporting legend, Olympic freestyle skiing champion Alexandre Bilodeau, also used data to stoke his success. He carefully measured every aspect of his performance to set goals for himself on the slopes. Now, he encourages entrepreneurs to do the same in the boardroom.

Understand what you're measuring

"Having a benchmark for key performance indicators (KPIs) is very important," Alex says. When training, he needed a baseline of his past and current performance so he could forecast his realistic future trajectory and plan a series of goals.

Every day during training, Alex's coaches would film each run down the slopes and then scrutinize every video in detail, looking for any errors or areas of improvement. The team used that data to create KPIs for key points in time. This enabled them to help Alex set quantifiable goals, such as the height of his jumps and the number of mogul bumps he hit per second.

Alex says this close assessment was gruelling, but it guided him on a journey of constant improvement toward the Vancouver 2010 Olympics and to Sochi four years later, winning him two gold medals for freestyle skiing.


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What's useful on the slopes also works in the boardroom

If this sounds a lot like how you'd run a business, you're on the right track.

After retiring from professional skiing, Alex became a leading business advisor. Now, he uses his experience measuring and projecting every aspect of his physical performance to advise entrepreneurs on how to do the same in business. Where Alex's team measured jump height, an entrepreneur might measure product quality. Where Alex predicted future goals such as the speed of his downhill run, a business owner might try to increase their revenue, measuring such metrics by producing a business performance report.

This performance planning process isn't always linear. Strategy might entail a short-term sacrifice in performance to achieve a longer-term goal.

Play the long game when making data-driven decisions

"As an athlete, I might take a step back because I need to make sure that I'm not going to get injured, so I might miss a training camp to heal something," Alex says.

There's a close alignment between his approach when training for competition and how he advises entrepreneurs to plan quantifiable business goals.

"In business, you might forecast going through a J-curve because you want to build your sales team," he explains. "So in the first year, for example, you'll take a hit in your EBITDA and then you'll be back on top."

Careful measurement and data analysis helped Alex stay on track to reach his final Olympic goals. Today, it also enables the entrepreneurs that he advises to set and meet clear objectives by keeping tabs on their critical business metrics, whether that's product shipped, quarterly revenue, cost of sale, or all of the above. They can then use this data to make financial projections that help them meet their business goals.

Good tools are a critical part of any data-driven business. The insights they generate are only as good as the data you put into them. That's why a world-class digital accounting solution is vital to your business. QuickBooks Online enables you to generate customizable reports to help you see how your business is performing now, and to forecast where it will be in the future. Want to see how it's done? Check out our cloud-based subscription plans and sign up for a free trial.


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