Let’s develop success measures
Now that we know our main objectives for our lives and the critical success factors that will help us achieve them, let’s design success indicators.
Let’s assume that your main objective is to have financial freedom and your critical success factor is generating more income.
How do we develop a success measure for this?
Let’s start with the objective. “Financial freedom” is when we no longer have to think about our finances. An appropriate measure might be the gap between our passive income, which is income that we do not have to spend time earning — for example, stock dividends or income from rental property — and our necessary expenses. If your passive income is higher than your necessary expenses — that means you have financial freedom.
The critical success factor that helps you achieve that objective is “generating more income” — but how do we measure this? For example, is it “the percentage change in your monthly income”? Or “your number of channels of income?”
You can see that when you design performance measures for main objectives and critical success factors, they still have a cause-and-effect relationship.
Sticking with the previous example, if your monthly income has increased, you will be able to invest more. This will reduce the gap between your passive income and your expenses, and you will step closer to “financial freedom.”
So go ahead! Start writing and developing performance measures right now. If not now, then when?
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