10 Apr 3 Steps For Improving Business Performance
“What gets measured gets improved”
– Peter Drucker
Imagine driving your car across the country without a dashboard in front of you. How would you know when you were going to run out of gas or if your engine was about to overheat? I know this sounds ridiculous, yet so many business owners do this every single day. They don’t have a dashboard in front of them and they fail to monitor and measure how their business is performing. It’s really no different than if they were running their business wearing a blindfold.
How well do you know what’s going on in your business? Are you aware of how it is really performing? If asked, how quickly and easily can you answer these questions? If this is new to you, or you would like a review, here are three steps you can use to begin measuring the performance of your business.
1. Determine What Needs To Be Measured
Often referred to as indicators, or key performance indicators, the first step in measuring something is determining what needs to be measured in the first place. What information is critical for you to make important decisions, and to let you know if you are making improvements? Here is a small list of sample indicators that can help you measure the performance of your business.
$ Sales Revenue % Gross Profit $ Net Profit
$ Cost of Goods Sold (COGS) % Contribution Margin # of Transactions
$ Average Ticket Sale # of Website Visitors # of Foot Traffic
# Appointments Set # of Appointments Attended # Sales Conversions
# of Complaints # Lead Time $ Inventory
2. Determine Where To Find the Information to Measure
After determining what it is you want to measure in your business, the second step is finding out where to collect this information you wish to measure. Although a majority of these indicators can be pulled from your financial statements, you might have to be creative and establish your own methods for tracking the rest of the information. For example, if you determine that tracking the number of complaints is important for helping you improve performance, how will you track them? Sometimes using a pencil and paper to create a tick chart is all that is required. Keeping track of numbers to measure doesn’t have to be complicated. What’s important is that they are tracked consistently over time.
3. Schedule Time For Reviewing and Analyzing What You Measured
The third step for measuring the performance of your business is to review them on a regular basis. It does no good to print off financial statements, or record the number of appointments you had last month if you are never going to analyze the information.
What really helped me was when I set up time for reviewing my indicators as an reoccurring appointment on my calendar. Every month I had a specific date and time reserved specifically for reviewing my indicators. I used a very simple Excel spreadsheet to record my indicators from month to month, so it became easy to track my monthly progress. By scheduling these appointments in advance I was able to develop the habit and repetition for always staying up to date and current.
Measuring Puts You In Control
Learning how to measure my important indicators was a turning point for me in my business. Because of my ignorance and intimidation with financial information, I spent many years operating my business wearing a blindfold.
However, once I learned what to track and started doing so consistently, my business performance began to increase, along with a renewed feeling of being in control. If you are willing to take the time to establish and track your own indicators, I am confident the outcome will be the same for you.
To Your SUCCESS,