Evaluating business performance
To succeed in business requires good strategic decisions, informed by in depth understanding of your own business performance and the wider market. Evaluating business performance doesn’t need to be overly complicated.
Review your business activity and what you set out to achieve
Your business goals should keep you focused. Set targets for your business to achieve, then conduct regular business performance reviews to ensure that you are where you want to be.
Areas to focus on include:
- Sales: have you performed as expected?
- Innovation: are new ideas developing on target?
- People: have employees and teams achieved their individual targets? Are you retaining staff or is staff turnover too high?
- Efficiency and profit margins
The efficiency of your business operations is down to the best use of resources.
- Operational costs: could these be reduced? Look at your utility bills, rent, staffing costs and other expenses.
- Time: are you wasting too much staff time on inefficient processes? Could you streamline your finance function so that time can be better spent on more profitable activities?
- Do your product prices or hourly rates bring in enough income? Do you need to put your prices up? Are loss leaders paying their way?
- Finance: are your sources of funding secure? Can you think of other ways to bring in money?
Research the competition
Business performance doesn’t just depend on what you do within the company. Competing businesses could seriously affect your bottom line. It’s imperative to keep up with what other businesses are doing in your field.
- How much do they pay their staff?
- What’s their pricing like?
- What is their target market?
- Are they offering anything that you don’t?
Keep an eye on wider trends
Your business doesn’t exist in a bubble. As well as your competitors, the wider world needs to be considered when evaluating business performance. That could include the local and international economy, the market you’re part of, and technological progress.
- Have prices gone up or down? The cost of raw materials could dramatically affect the profit you make on your products.
- The exchange rate: is it affecting your profits? Could you source materials from elsewhere?
- What’s the next big thing in your field? Are you keeping up with new developments, or are customers likely to look elsewhere for what they need?