The power of metrics

Renowned entrepreneur and former Dragons’ Den star, Piers Linney, delivers crucial advice on steering a business to success by paying attention to vital metrics. In the episode of the Founder Metrics podcast by Vestd, Linney emphasises the significance of key performance indicators (KPIs) and metrics in navigating the challenges of the business landscape

CREDIT: This is an edited version of an article that originally appeared on SME today

Linney stresses the importance of having robust metrics to gauge when adjustments are needed, be it due to market fluctuations, interest rates, energy costs, or talent acquisition challenges. He warns against the tendency of many business owners to ignore these indicators until they face a crisis, urging them not to “stick their head in the sand.”

Ifty Nasir, Vestd’s founder and CEO and the podcast host, reinforces the need for founders to exercise judgment in identifying the levers for success. He draws an analogy with adjusting an airplane’s altitude, emphasising that early interventions, like changing trajectory, are more effective than taking drastic actions later.

Top 3 signals business owners can’t afford to ignore

Linney divulges three critical signals that founders often overlook but can make or break a business.

Growing too quickly

Linney recounts experiences from Dragons’ Den where businesses faced challenges due to rapid, unsustainable growth. He highlights the necessity for growth and funding alignment to avoid burning through cash too swiftly. Resetting, adjusting the cost base, and strategic changes enabled these businesses to achieve long-term success.

Tighter margins

Linney shares his past tendency to ignore tightening margins during market challenges. He advises business owners not to compromise long-term success by squeezing margins to support existing cost structures. Instead, Linney recommends analysing metrics objectively and making significant decisions to ensure sustainable growth.

Rising costs

In the context of a growing business, Linney emphasises the substantial costs associated with recruiting and managing employee churn. He warns against the trap of hoping costs will revert to normal and emphasises the need to confront the reality of rising costs. Linney advocates for timely, objective decision-making, even if it involves difficult actions like reducing headcount.

Linney’s insights serve as a valuable guide for business owners, encouraging proactive engagement with metrics, strategic decisions, and an adaption to changing business landscapes. By embracing these key signals, employers can navigate the path to success with resilience and foresight.