What is business performance and how to use it to grow your business

What is Business Performance?

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:

• Revenue
• Profit margin
• Market share
• Customer satisfaction
• Employee engagement
• Operational efficiency.

The importance of business performance

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.

How to Measure Business Performance to Grow Your Business

To use business performance metrics effectively, companies need to first identify the metrics that are most relevant to their goals and objectives. For example:

• If a company's goal is to increase revenue, they may track metrics such as revenue growth, profit margin, and customer acquisition cost.
• If their goal is to improve customer satisfaction, they may track metrics such as customer satisfaction scores, customer retention rates, and Net Promoter Score (NPS).

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:

• Customer satisfaction levels - are you seeing an increase or decrease in customer complaints, testimonials or referrals?
• Brand awareness - Are people more aware of your brand in the marketplace, and how does that compare with the competition
• Employee satisfaction - arguably your most important resource; are your staff more happy and motivated than previously or less?
• Delivery times - speed is important for clients. Are your processes allowing you to provide quicker delivery times?
• Return rates - If you sell products, has build quality or product information improved in a way which reduces return rates and refunds?
• Conversion rates - Have improvements in your marketing, etc improved conversion rates?
• Lead & closure times for sales funnels - Is your sales process resulting in faster sales with shorter funnel times?

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.

Actions to track Business Performance to Grow Your Business

To use business performance to grow your business, you need to follow a few key steps:

1.  Set SMART Goals and Objectives:

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.

2. Collect and Analyse Data:

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.

3. Identify Areas for Improvement:

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.

4. Develop a Plan:

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.

5. Implement Your Plan:

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.

6. Staff Engagement

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.

Conclusion

Business performance is a critical component of any organisation's success. By measuring and analysing performance metrics, companies can:

• Identify areas for improvement
• Make informed decisions
• Take appropriate action
• Set goals and objectives for the future.

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.