In my previous blog ‘Are you there yet’, I talked about what performance measures are and how we use them in everyday life to keep ourselves on track.
In this blog I will be looking at what precisely you should be tracking in terms of your business, and in the next blog in this series, sharing the tools that you can use to support you in doing so.
What do you need to monitor and why?
There are a few critical areas in your business where you should be tracking and monitoring your performance, and by doing so, you can assess where your strengths and weaknesses lie. You should measure both financial and non-financial targets as they will both feed into each other in the bigger picture.
The critical thing to remember before monitoring your performance is to think about your goals. By setting a goal, you have a fixed point to work towards, and then you can quantify your performance against those goals.
For each of the areas I discuss below, consider what success in that area looks like to you. Check where you are now and then agree on a schedule with yourself to check in and measure your performance. I would suggest once a quarter as that gives you a reasonable amount of time to see any real changes.
When it comes to your customers, you should consider tracking things like:
- How many you have at any one time?
- How often they use your services or products?
- Do they return to you (are you retaining their business?
- How often are they buying?
- What are they buying?
- If they are purchasing upsells or other products in your staircase?
By tracking and monitoring all of the above, you will be gathering a considerable amount of data that will help you to make sound business decisions. If certain products and services are selling better than others, you can look at why that could be. If products aren’t selling, you can do some market research to find out why and decide as to whether you wish to continue with them and if they are cost effective.
If customers are buying once and never returning, you can look at why that might be and then put a strategy in place to focus on building customer loyalty. If customers aren’t buying your upsells, you can consider if they are being marketed to them in the right way, and at the right time.
Your customers are the heart of your business, and so by knowing and understanding how they are interacting with your business, you can use what you have learnt to feed into all the other areas of your business.
Your Social Media Impact
Most businesses use social media these days, and when used correctly, it can have a significant impact on your business success. There are several leading platforms to choose from, and it is challenging to maintain a constant presence on all of them. My advice would be to select one or two of the platforms where your ideal clients and audience will be spending their time, and work on developing your visibility on them.
The key areas that you want to be tracking on your social media are:
- Your reach – how many accounts are your posts reaching? How many of those are accounts your know and how many are new impressions?
- Your engagement – how many people are leaving comments or liking and sharing your content? See if you can find any trends such as do people prefer certain types of posts or if they tend to get more engagement at certain times of the day.
- Your hashtags – Keep track of what hashtags you are using and try different ones. Do some work better than others?
Your Financial Performance
This is probably one of the areas you are most keen to measure in your business and is a good indicator as to how well your business is performing. A regular review of your financial performance can help you to reassess your business goals and make practical improvements moving forward.
When reviewing your financial performance, you want to measure things such as:
- Your cashflow – Do you know how much available cash you have in your business at any one time? You can read more about cash flow and how to get money flowing into your business in our blog here.
- Your costs and expenses – Are you keeping on top of how much you are spending and how much it costs you to run your business? Are your sales and pricing structures covering these sufficiently and leaving you enough profit? It is essential to regularly review how much you are spending as it can be easy to lose track!
- Your growth and profits – Do you know how much money you are making after your costs have been taken into account? Do you know the difference between your operating margins and net margins?
If you have staff, it is vital that you are monitoring their performance from a financial perspective but also monitoring their engagement and satisfaction levels.
If you are a sales based business, commonly used measures are:
- Sales per employee
- Contribution per employee
- Profit per employee
By monitoring the above, you can see whether your staff are viable in your business as well as helping you to identify any training needs or areas for development.
If your staff are not sales based, it can be more challenging to monitor performance, but you can measure factors such as how many hours are being spent on various projects with the use of timesheets. This would allow you to measure how profitable specific projects are and whether that is the best use of your staff time vs the return that you are getting.
These are just a few of the main areas that you can monitor performance in your business. The key is to pick the areas that have the most impact on your business, and it’s growth and dedicate time to exploring these in detail. The results and information that you get as a result will provide you with vital data that you can use in a variety of ways to then create strategic plans moving forward.
If you would like support in exploring any areas of your business and tracking its performance, as well as creating tailored strategies for improvement, please get in touch with me on firstname.lastname@example.org or call 07950 472236 to discuss services and packages to suit you.