This is the fifth and final article in our series on business strategy, following the STAR cycle concept. (If you missed the previous articles, discover how to implement a business strategy; why you should spend time on business strategy development; how business tools help you achieve your strategic goals; and how business processes affect profitability.)
If you’ve been following and implementing these tips, you will have made great progress in making your business more profitable and more valuable.
The final step in the process is to regularly measure your actual business performance against your business strategy.
How to measure your business performance
Monitoring and measuring your business performance requires reports that can easily be obtained from your systems, and that provide you with accurate and complete information.
There are four key steps in business performance measurement:
Identifying the KPIs and data you actually need: There are so many reports you could run. But which ones actually matter? Don’t overwhelm yourself with numbers and data: stick to the nitty gritty important stuff. Some of the information may be financial, and some may be non-financial, for example, number of sales leads, number of customer complaints, absenteeism rates, and so on. Every department in your organisation should have at least one leading indicator that’s being monitored and measured.
Timely summaries: Instead of pages and pages of data, you want to be able to compile a summary of your important data. The key is being able to do this easily and promptly, so that you can pull up-to-date data in less than a minute or two. (Rather than relying on an employee to compile a report, which might take a day or more till you receive it.)
Communicate the results with your team: Short, regular meetings are key to reviewing the results. How’s are things going? What’s going well? What needs attention? Who is responsible for any remedial tasks, and what is their deadline?
Reality check: Is your business strategy realistic? Are there any refinements or changes you need to make in the next planning cycle? It’s important to remember that business strategy is an on-going process, rather than a project with a start and an end point.
Use financial dashboards to save time on business performance analysis
The biggest obstacle to measuring business results tends to be collating relevant data in a prompt and timely manner. Without the right tools, this can be an onerous admin task, involving running reports manually in numerous systems, and then importing the data into a spreadsheet. The risk of error is high, and by the time the report is completed, much of the data is likely to be out-of-date already.
That’s where integrated dashboards come into play: you can define your business performance measurement parameters from around your organisation, and the software integrates with other systems to show all your key data at-a-glance, in just a few clicks.
Dashboard software can automatically create charts and other visual tools to help non-financially minded people understand the data more clearly.
Best of all, the dashboard is always up-to-date with the latest data, so the information you have is fresh and relevant for your decision making.
If you need help with selecting and installing dashboards – as well as deciding which KPIs to track – the team at Empower Business can help you.