When you’re totally immersed in the minutiae of your business, it’s hard to step back. But, if you want to gauge the progress of your company, this is exactly what you need to do.
You have to be able to take a panoramic view, assessing your company in the context of its market and competitors, sifting the important details from the mass of data at your disposal.
This guide is designed to help you create a comprehensive strategy for monitoring your business. As your company grows you’ll face a million-and-one concerns, but these tips should stand you in good stead through good times and bad.
Dig out your business plan
Business plans aren’t just for start-ups. A concise, comprehensive business plan provides the backbone of your ongoing strategy, and an obvious reference point for future reviews.
A good business plan will contain a timeframe for achieving all key targets, identify major competitors, and map out sensible financial goals. There’s no point getting carried away; if your business plan isn’t realistic, it’s worthless.
But your plan should not be set in stone either – instead, it should be reviewed regularly, and flexible enough to allow you to adapt your strategy to respond to key changes in the market, such as the emergence of new competitors or advances in technology.
Establish tangible goals
With certain arms of the business, distinguishing good performance from bad can be tricky. While some arms, such as sales, provide a clear indicator in the form of revenue, many have no tangible bottom line. So it’s important to establish key performance indicators (KPIs) for each part of the business. KPIs gauge progress by breaking down each function of the company into its core purposes.
To do this, you need to determine what metrics will enable you to measure performance in each area. For example, if you’re working out KPIs for the accounts department, you might consider the amount of time it takes to secure payment from invoices. Alternatively, for customer services, you might set a target for the time it takes to respond to each enquiry.
Once you’ve established your KPIs, work them into a dashboard – an at-a-glance overview of the KPIs, tailored to each individual objective. Stephen Clarke, managing director of the Contact Group, a company which provides communication tools for schools and hospitals, says his firm’s dashboard includes:
- New sales
- Customer attrition
- Retention rate
- Status of existing customers
- Average debtors days
- Top 10 debtors
- Sales conversions rate
- Average customer spend
- Gross profit margin
- Net profit margin