Business performance measurement process

As a business owner, what areas of your business do you test and measure? How do you know which strategies are working or not?

As a business owner you may not like doing this because it means that, however small, there is a chance that what you have been doing isn’t working. In other words, is it possible that you’ll discover that you have been spending money without seeing any returns?

In fact, you have probably been testing and measuring all your business life. For example, you may have placed a newspaper advertisement that didn’t work but a flyer in the post that did generate business. You just didn’t do it on a regular basis and in a structured way.

If you are looking to be more focused and structured then the following steps can be considered when putting in a system to test and measure certain aspects of your business:

  1. Monitor what you are currently doing in each of the areas of your business that you want to test and measure. For example, if you wanted to test and measure the efficiency of your customer delivery system, you would monitor how your dispatch department is working by having a series of checklists completed over a set period of time.
  2. Modify and increase what is currently being done, depending on the results you get. Keep a record of the results this has on what you are testing and measuring. For example, you may need to measure something every day rather than every week.
  3. Test and measure for another two weeks.
  4. Check what the results show. Has there been an improvement?
  5. If there has been no improvement, implement another strategy. There is no point in continuing with a strategy in the hope that it might produce results.
  6. Remember that you are aiming for continual improvement.

The Power of Key Performance Indicators (KPIs)

Another set of numbers that should be tested and measured continuously are the key numbers that drive your business. These are not just the financials but also the non-financial numbers. Do you know your key performance indicators and do you monitor them continuously?

Here are some examples of key numbers to consider that are critical to make informed decisions to reduce risk and increase returns:

Marketing

  • Return on marketing investment
  • Conversion rates from marketing strategies

Sales

  • The number of transactions each month
  • The average value sale of your transactions each month

Team Management

  • Staff turnover rate
  • Return on each employee

Of course, each business will have their own key drivers. Your key drivers may be different from the above or you may only need to test and measure some of the items listed above. However, the fact that you need to have key performance indicators is common to all businesses.

It is true to say that what you measure grows and improves. The only way to make an objective decision is one based on numbers. Otherwise, you are guessing or making decisions based on gut instinct.

Compare it to sports. When was the last time you watched a football game or tennis match and nobody kept score? It is the same for business. You have to keep score of everything you do. Otherwise, how can you fix something that is not working?

If you’d like to find out more about how you can improve your company’s performance I would love to hear from you! Please feel free to message me.

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Does this resonate with you? If you would like to book a complimentary, no-obligation, coaching session to discuss this further, please email me at falgunidesai@actioncoach.com