What Is Business Performance? Business performance is management and analytic processes that allow you as the business order to achieve your defined goals. So with that said, to improve your business performance you, you have to an overall business strategy with defined goals developed for your business.
What Affects Business Performance? How a business performs is usually reflected in their overall financials. There are some businesses that make money despite themselves, but this is not usually over a long period, as a poorly operated business will eventually have an effect on their financial performance in the end. A well-performing business will operate well across all areas of their business, will have an overall business strategy and direction defined, will have documented processes and procedures, and will follow best practices in each area of their business. They also will measure and track their performance, whether that is their financials, sales forecasts, return on their marketing efforts, or their customer retention.
Importance of Strategy There are times when we talk to a potential client; they are turned off when we tell them our focus is on the strategic side of their business. They usually say - I am not interested in that I just want to get help hiring employees, creating marketing materials, or getting sales channels. The problem is without a strategy and an understanding of where you are going and the costs associated to get there; you are not sure if the task you are looking to do will help accomplish your business goals. You may find out you would be spending money and time in the wrong place. You have to have an overall strategy for your business. If you don't, you most likely will not succeed long term, be able to secure financing from a bank or investor, or be able to sell the business down the road, even if you can muddle through. Strategies are not there to bind you, as strategies in businesses change on a regular business. They are there to guide you to help your reach your goals.
Defined & Documented Processes & Procedures If there are not processes and procedures within a business, that is when chaos starts to take over. It is fine when you are a Soho business as you are doing everything, but the minute you have one employee or have someone besides yourself performing work, it is at that time you need to have defined and documented processes and procedures. Whether that is a credit and payment process within finance, an employee handbook in human resources, or a sales process to follow, all will help you manage your business.
Best Practices There are best practices in every area of a business. For example in HR, one best practice is to have defined job descriptions for your employees so they understand the job they are performing. Another is to make sure the employee knows who they report to and to ensure that they receive regular feedback and performance evaluations. For operations, one best practice would be to have the right systems in place to track what you need to within the business whether that be financial information, sales, or employees. An overall business best practice is to have contracts in place such as employment contracts, vendor/supply agreements, or reseller contracts. Contracts written or reviewed by lawyers protect you and your business.
Measuring & Monitoring It is important to be able to measure and monitor your business performance. When within your business you have a strategy in place with goals defined and how you plan to get there, defined and documented procedures, and utilize best practices, it becomes easy to be able to measure and monitor your performance. For example, if you have a goal of achieving 10% growth, it is important you can measure and monitor your success. If you have a marketing plan, sales personnel with quotas & contracts to support generating that level of revenue, a credit strategy where you collect down payments and collections for those that do not pay on time, and a proper financial system to track your revenues and expenses, you are able to monitor your performance. Even if you didn't reach your goal, you can tell exactly where there were issues in not meeting the goal. You may not have gotten a return on your marketing; your sales personnel may not have met their forecast or your accounts receivable department was not able to collect on all sales.
Summary No matter where you are in the business life cycle of your business, business performance is important in making sure you are business is running as effectively and efficiently as possible where you can reach your goals. If you are wondering how your business is performing, get your business performance score today.