The success of any business depends on its strategic planning and subsequent management. Your business is up and running today because you made the right decisions based on the results of your market research, cost-benefit analysis, feasibility study as well as SWOT and similar analyses. Without these tools and techniques, it could have been hard for you to arrive at the good decisions that you have so far made.
Now that your business has grown large enough, it is becoming harder to visualize its current state or even control its behavior. You may have set strategic business directions and goals but without proper monitoring of your current business state and behavior, it will take a miracle for it to survive and succeed.
This is why you need to have good performance measurement and control systems to enable you to maintain or alter the routines and procedures for the survival of your business. The following are categories of performance for measurements and the respective tools that you can use to measure each.
- Financial performance
The growth of any business depends on the amounts of sales that it makes or simply the number of customers that it receives. Your business could be doing well and making good sales but you still need to know its financial trending and health status in terms of its revenues, earnings, cash flow and ROI.
This is very important especially if you want to expand your business, when there is increase in expenses, experiencing low cash reserves or borrowing too frequently. When analyzing your business financial performance, you need to look at your financial statements and then analyze it using tools like financial ratios, horizontal and vertical analysis as well as other market-based measurements.
- Internal Business process performance
Internal business processes affect the growth of your business and their performances need to be measured from time to time. This will inform you whether your processes are effective, efficient, productive, competitive, and profitable as well as have good capacity, value and quality.
An effective and efficient process will ensure that you not only get your expected results but also with the least amount of resources.
Business process performance enables you to monitor the activities of your business and collect relevant information that will help you make good decisions. There are many tools that can help you with this including the cumulative flow diagram for projects and product development and the balance scorecard among others.
- Employee performance
Measuring employee performance is very important to your business because it determines whether they are performing as expected or not. This is a very sensitive area because performance appraisals should come out as credible in terms of being fair and just.
There are many tools to measure employee performance and they can either be used individually or in combination for better analysis. They include self evaluation, balanced scorecard, 360 degree feedback and management by objective among others.
- Customer value performance
Your customers are very important to your business growth and you need to always measure their satisfaction, loyalty as well as your market share. To achieve this, you need to use techniques like monitoring, surveys, feedbacks and so on.
- Innovation performance
Continuous innovation is part of every successful business and you will need to always measure the performance of your new products, processes, new suggestions as well as the rate of your business improvement. A good tool to measure this is the balanced scorecard.
Business performance tools are a great means to achieving your business strategic goals and you should incorporate them as part of your major efforts for better management. Business management trends are highly changing and you should choose the tools that will help you make the best business decisions.