If you’re anything like me, you probably feel a little funny about how often you check your stats. I check them throughout the day, with a regularity I’m almost ashamed to admit. There’s even a particular stat program I use which plots out a sexy graph, above which are written the words: “Statistics updated every 24 hours.” That doesn’t keep me from checking it about three times a day.

Regardless of the social implications, we stat-freaks are on the right track. For whether you acknowledge it or not statistics are the very backbone of your business, your production, your income and pretty much everything else that matters. I use them (not just look at them) every single day, whether it’s at my blog or examining my design business.

What are statistics?

If you look up “statistic” in pretty much any dictionary, you’ll notice that even people who write dictionaries have bad days. A survey of dictionaries I have to hand uncovered the following definitions for the word “statistic”:

Dictionary.com – Numerical data
Websters – A numerical fact or datum
Dictionary.org - The practice or science of collecting and analyzing numerical data in large quantities, esp. for the purpose of inferring proportions in a whole from those in a representative sample.

There’s nothing wrong with those, really, aside from being absolutely useless. According to those definitions having 5 fingers on your hand or having a birthday on the 15th of May are statistics. Those sorts of useless definitions aren’t going to get us business folk anywhere. We need applicable data that we can put into immediate use.

A definition of “statistic” that doesn’t suck

I’ve got a ground-breaking business-oriented definition that will change your life. If you understand it in its entirety it will change the face of business as you know it. Yes, really.

Statistic : A quantity representing production over a certain time period, compared to the production of a previous identical time period.

That’s not Shakespearian in quality by any means, but it actually does something as a definition. Let’s break it down a piece at a time and see what it means and why it’s so useful.

“A quantity representing production…” - Whether you pour steel, hire personnel, write books or design websites you do something. You produce something. A statistic is, in part, a number that tracks such production. Examples:

“I poured 6 tons of iron ore.”
“I wrote 1,000 words.”
“I designed 5 websites.”

Not bad, but that’s still somewhat useless data. Those numbers tell you something was produced and that’s great, but there’s no time accounted for. Pouring 6 tons of ore or writing 1000 words may good if it happens in a day, but over 12 months that’s lousy production. Obviously the time part of the definition is important and starts to add to the complexion of its usefulness.

“A quantity representing production over a certain time period…” Now we’re getting somewhere. It’s getting better and more useful with every word, as seen by these examples:

“In December I sold 243 sweaters.”
“I wrote 1,000 words on Monday.”
“We sold 73 ebooks on the first day.”

These stats are now trying to tell us something, and in fact they’re doing a good job of it. We now know what happened and how long it took. If we were to apply this information towards our lives and business we’d be home free…almost. There’s one thing left to add:

“…compared to the production of a previous identical time period.”

There enters the real magic of statistics, the comparison.

If you’re tracking your production over the span of a five-day week, it’s really only going to make sense if you compare it to the production of another five-day period. If you design three websites one week and made some good cash, you’d want to duplicate or increase it the following week. It only makes sense.

Doing this gives you dual snapshots of how things are going now and how things were going then. You can easily see if you’re producing more than you were and performing more of the actions that really count.

The last thing I’d like to mention, though painfully obvious, is very important and is the reason we compare identical time periods. Doing so takes into consideration market fluctuations, such as Christmas and other holidays. To say I sold 243 sweaters in December really makes the most sense when compared NOT to November or July sales, but to December sales a year earlier. If you’re in a seasonal business you’ll have such spikes and troughs. The idea with statistics is to track the spikes and troughs in relation to each other, not other unrelated time spans.

Now, I realize this isn’t brain surgery and that I’ve now beaten this horse thoroughly. Many, if not all of us, have an inherent sense of production, income, etc. We know when we’re productive, we know when we haven’t done jack and we know when we’re spending a little more money than we’re taking in.

While stats can show us such phases with frightening clarity, the real use of them is in breaking those big pictures down into smaller actions. The smaller actions, remember, are what create the greater trends. In case you missed it, that right there was a fairly unmistakable hint that what you do every day matters, and determines what’s going to happen next week.

Now that you’ve got an infinitely useful definition of statistics, the next post will feature how to put these stats directly and immediately into action in your own life and business. You’ll learn why you never again have to say to yourself, “I just don’t get it. Where’s all the time and money going? Where are all my clients?”