Business performance is a measure of how effectively a company is using its resources to achieve its goals and objectives. These resources can include financial capital, human capital, physical assets, and technology.
Business performance is typically measured using a combination of financial and non-financial metrics, such as:
Measuring, monitoring and evaluating business performance is essential for several reasons. First, it allows companies to assess how well they are achieving their goals and identify areas for improvement. For example, if a company's goal is to increase revenue, measuring revenue growth over time can help them understand whether their current strategies are effective or if they need to make changes.
Second, business performance metrics can help companies make informed decisions. By analysing data on revenue, customer satisfaction, or employee turnover, companies can identify trends and patterns that can inform their decision-making. For example, if a company notices a decline in customer satisfaction, they may investigate the cause of the decline and make changes to improve the customer experience.
Finally, business performance metrics are often used to benchmark a company's performance against its competitors. This benchmarking can help companies understand how well they are performing in relation to their peers and identify areas where they can improve.
To use business performance metrics effectively, companies need to first identify the metrics that are most relevant to their goals and objectives. For example:
As well as measuring the ‘outputs’ of the business, for example gross profit and net profit etc, it is advisable to measure the ‘inputs’. These will be areas such as the number of enquiries from prospective clients, and the conversion rate from enquiry to buying customers. These are important as they are the activities that drive revenue, gross and net profit.
Business performance monitoring can be used to track and improve all areas of a business but some of the most common include:
Once the relevant metrics have been identified, companies can use them to monitor their performance over time. This monitoring can be done using a dashboard or other reporting tool that displays the data in an easy-to-understand format. By regularly monitoring performance metrics, companies can identify trends and patterns and make informed decisions about how to improve their performance. Ideally you should have KPI’s (Key Performance Indicators) which help you determine if you’re on track for your goals.
In addition to monitoring performance metrics, companies can also use these metrics to set goals and objectives for the future. For example, if a company's revenue growth has been stagnant, they may set a goal to increase revenue by a certain percentage over the next year. By setting specific goals and objectives, companies can focus their efforts on achieving these outcomes.
To achieve these goals and objectives, companies may need to make changes to their strategies or operations. For example, if a company's goal is to reduce customer churn, they may need to improve their customer service or offer new products or services that better meet customer needs. By using performance metrics to identify areas for improvement, companies can make data-driven decisions about how to optimise their operations.
Finally, companies can also use performance metrics to communicate their performance to stakeholders; such as investors, employees, and customers. By sharing data on their performance, companies can build trust and credibility with stakeholders and demonstrate their commitment to achieving their goals and objectives.
To use business performance to grow your business, you need to follow a few key steps:
The first step in using business performance to grow your business is to set SMART goals. SMART stands for Specific, Measurable, Achievable, Relevant and Time-bound. Smart goals are clear, specific, and measurable goals and objectives. These should be aligned with your overall business strategy and should be based on your analysis of your current performance. Your SMART goals and objectives should be challenging yet achievable and should be reviewed regularly to ensure that you are on track to achieve them.
The next step is to collect and analyse data about your business performance. This data should include both financial and non-financial performance indicators. Financial data can be obtained from your financial statements and should include information on revenue, profit margins, and cash flow. Non-financial data can be obtained through customer satisfaction surveys, employee engagement surveys, and other feedback mechanisms.
Once you have collected and analysed your data, you should identify areas where your business performance is weak. These areas may include low sales, low customer satisfaction, or high expenses. By identifying these areas, you can develop strategies and take action to improve your performance in these areas.
Once you have identified areas for improvement, you need to develop a plan to address them. This plan should include specific actions that you will take to improve your performance in these areas. It should also include timelines and performance metrics to track your progress.
The next step is to implement your plan. This may involve making changes to your operations, investing in new technology or equipment, or launching new marketing campaigns.
It is vital to get staff at all levels engaged in understanding what the overall goal is, understanding what their own responsibilities are as part of the plan. By ensuring the staff are confident in what they need to deliver, they can provide relevant training/coaching as required. It’s important to regularly review each member of staff’s progress through appraisal reviews.
Business performance is a critical component of any organisation's success. By measuring and analysing performance metrics, companies can:
AT UKBM we can provide you with a bespoke ‘dashboard’ to enable you to track the
metrics/key performance indicators on a regular basis. There is no cost for this, and we offer a complimentary mentoring session to discuss the areas you wish to improve and will then provide you with a tailored one page dashboard for your business.
Book a free consultation session or request your free dashboard today.