What Do You Mean – Run Good Experiments?

Everyone who owns and operates a small business will have a belief that by doing certain things they will be able to sell their product and generate sales revenues that exceed the costs needed to support such revenues. That is, they will make a profit. A careful investigation of anticipated costs can usually come up with a pretty reliable figure of what is likely to be spent. But how many sales will be made? At best this will be an educated guess.

So when you get around to the day-to-day actions of actually running your business, you are, whether you care to acknowledge it or not, running an experiment. You have, in essence, predicted that particular efforts will produce a particular sales revenue at a particular overall cost. Does this actually happen? That is the experiment. Experience teaches that reality rarely works out exactly as one predicts. Unexpected and usually unpredictable happenings occur that affect sales, or costs or both.

Small business people typically pay attention to their bank balance and deal with critical situations as they arise. This gives them a qualitative sense that they are “doing all right” or that things “aren’t going too well”.

Many of them, however, have little or no idea as to the detailed measurements that inform just how well their business experiment is actually working out. They have no formal system allowing them to analyze on-going performance, and no formal routine for making adjustments in a timely fashion to best respond to unforeseen realities.

This lack of formal routines ensures a “seat of the pants” style of business management. This greatly increases the odds that someday they will find themselves in serious trouble because they failed to appreciate until too late, things that a formal measurement system would have revealed much earlier. Even when they are doing “reasonably well”, the odds are high that this will be well below what could have been achieved if the ongoing outcomes of a more formal experiment had been carefully analyzed.

So formulating and running “good” experiments is what you need to get good at. “Practicing” is how you get good at formulating and running good experiments. Making sure you know what to practice is what our online training programs are designed to achieve.