Why your business metrics might be misleading
With the attempted assassination of Donald Trump, the Euros and Wimbledon, the general election already seems like a lifetime away.
Nevertheless, I’d like to revisit this chart, which caught my eye. (It’s from the BBC – original here.)

It shows the difference between the percentage of votes that each party won, and the percentage of seats they won. You can see that for some of the parties – like Labour, Reform UK and the Greens – there is a huge discrepancy.
It’s notable that in the run-up to the election, almost every single polling company focused on the vote share. We were forever hearing about the gap in points between support for Labour and support for the Conservatives.
It was misleading, because that gap did not reflect the division of seats in Parliament – where power ultimately lies. They were measuring the wrong thing.
Labour, meanwhile, was evidently measuring the right thing – the seat share – because it carefully focused on getting out the vote in key seats, maximising the number it won.
This confusion over what to measure occurs in businesses, too.
All too often, companies measure things that they believe are standard, or useful, but are actually not that relevant.
Take, for example, heritage railways. Before COVID, the main metric many were interested in was ‘number of trains running.’ They all wanted to operate the maximum number possible of trains, because people loved seeing them and the volunteers loved the work.
Many of those trains, though, were not at full capacity. Some weren’t even at half capacity!
It was hopelessly inefficient financially, but the heritage railways often weren’t measuring these metrics (or did not ascribe them particular importance if they were).
All this changed following the pandemic, when the pressure on the railways to become financially viable increased. Nowadays there is widespread recognition that the trains need to be as full as possible, and what they measure reflects this.
How about your business? Does what you measure matter?
The test, for me, is whether the things you measure help you make better financial decisions.
As you run the business, you’ll have certain questions about where to invest, what to cut, what to do next. Does the data you collect help you answer those questions?
If the answer is “no”, then why are you measuring it? And what should you be measuring instead?
These are the kinds of question we tackle with our clients here at Insight Associates, as part of our work managing your finances to a world-class standard. Our mission is to deliver data that gives you critical insights (the clue is in our name…).
We work with our clients on this on an iterative basis. Every month, we present you with data about your business in our monthly management accounts. And each month, together, we also re-evaluate whether this was the right data to answer your most pressing questions, or whether something different or extra is needed.
Over time, we optimise the data collected, so that it really helps you manage your company better.
If the data you receive from your accountant doesn’t do that, it’s time for a change.
Hit ‘reply’ to this email or call us on 01279 647 447 to get in touch and discuss how we can help you get the information you need to make better financial decisions for your company – and grow much faster and more profitably.
Together, let’s measure what matters.
Warmly,
Garry
You might also like: What’s worse than not knowing your numbers? – Insight Associates Limited