Business Tips: 6 Performance Measures Small Businesses Must Track
Imagine dashing out without your wallet and worse case, your mobile phone battery is drained. That’s how it is with rushing to start a venture without proper planning.
One of my most favorite quote is “…no one starts building without first counting it’s cost”.
On this principle is hinged the success of any businesses. Having a well-detailed plan and performance measures is the road-map in the quest for business success. In this article, we will consider 6 performance measures small businesses must watch out for to prevent groping in the dark while battling the relentless changes that comes with running a business.
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Without having timely, accurate, quickly consumable and actionable visual insights of business performance small businesses are driving on the fast lane towards failure and it will take more effort than is required to succeed in such instances. Take, for instance, spending blindly without planning or performance tracking will in the worst case, mean that employees will not be paid duly. In the best case, employees are overpaid—because employers are leaving money lying around on the table.
For sound performance, the focus needs to be on top priority things! https://t.co/S6QgnpyC1g #CorporateSufi #Performance #PerformanceImprovement #PerformanceMeasurement #Goals #GoalSetting #TopPriority pic.twitter.com/WVeedzoIT7
— Corporate Sufi (@Corporate_Sufi) July 1, 2018
Having a good performance tracking is not as difficult as it sounds. It does not involve some serious training or huge expenses to put one in place. In reality, all you’re asking yourself or a consultant is, “how do I know whether I’m doing well or not?”. The best time to start thinking about measuring performance is at the start of your business venture.
Let’s briefly consider a few performance indicators you must watch out for to prevent a roller-coaster ride while doing business.
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Acquisition
Picking some sort of performance-indicator or sales metric is a must in performance tracking. Having a detailed report on sales is fantastic but you need to pick that one metric determines whether or not the sales process is successful. Most Telecoms operators refer to this metric as gross addition or new sims.
Variance
Variance analysis shows how the business is performing relative to the goals you set and articulate in your projections. It involves comparing actual with budget or forecast as the case may be. Measuring periodic performance allows time for proactively reacting to cost overruns or revenue shortfalls.
'Performance Measurement is a way to focus on the things that matter most'#performancemeasurement #strategyexecution pic.twitter.com/YT7052oskF
— BSEA (@B_S_E_A) February 14, 2018
Like Day Trends
Using your current performance to compare results from a past performance can be particularly enlightening. This type of comparison provides a useful point of reference for an owner to assess costs and revenue trends or behaviour. Imagine your Q1 profit margin was 10 percent. This doesn’t mean much but when the same period last year produced a 15-percent margin, it means a whole lot for businesses.
Industry Performance
While measuring business performance, it is important to know and put in mind industry-specific Key Performance Indicators –KPIs used to measure business performance. For instance, Telecoms, software-as-a-service or general eCommerce industry monitors subscription billing KPIs such as acquisition, churn, and lifetime value.
Competitor Performance
Information from peer activities will set the business’ expectation regarding what’s attainable, while simultaneously focusing on where to invest precious time. Comparing performance against competitor performance will either make you feel good about how well you’re doing or lead you to ask the right questions. Questions such as, “is the cost of labour higher than revenue?”.
New Initiatives
Every once in a while or however frequent, businesses try out new things that weren’t part of the plan but in its intent will improve the overall performance. These new sub-plans or sub-projects are referred to as new initiatives. Monitoring the performance of these initiatives will show the impact whether performance is improved or not.
Measure performance on everything that matters. But don’t waste time just measuring everything that can be measured. #performancemeasurement pic.twitter.com/p6DU7Bnxsy
— Andy Burrows (@boostbizfinance) May 17, 2018
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Be careful not to measure too many KPIs; pick a few that determine the outcome/outlook of all others. If you go about micro-monitoring every single detail, you might get a neck pain from bending too low.
It would be easy to measure the performance 30 more metrics, but too much information can overwhelm a busy business owner. Until you find the right mix of metrics, keep experimenting which of your metrics are the most important.
