Landscape with a tree - view while reflecting on evaluating performance

How to Evaluate Business Performance

Measuring your business success

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How to inspect your business to stay on track and take it to the next level

Measuring your business performance is crucial if you wat to grow your company. A good business assessment should look into all the business activities, determine where you are now as well as the gap between now and where you want to be. How do you evaluate your business performance?

Business evaluation goals

The aim of your business assessment is to find out what you need to improve in order to grow. Remember, what brought you here won’t take you there. You aren’t examining your company to ensure that everything is just fine… you want better than that. So you are looking for new opportunities and holes to plug. But you are also going to verify what you’ve already achieved, the goals you’ve met and this is a very rewarding moment, which can make you smile. This is a good occasion to appreciate your success and celebrate. 

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How to review your business?

Measuring business performance may seem complex, but it’s not. You may have come across long spreadsheets and evaluation reports and got put off by them. In fact, all you need to assess your business is a simple check list. Your checklist will depend on the type of business, here is mine with some comments:

Business inspection check list

For each point of your review make a list of what’s working and what to take action on.

  1. Systems and processes

    Without good systems you won’t be able to scale up. Review them in all your business areas and see if you need any updates. See what’s working well and what needs updating.

  2. Key employees

    Focus on your key team members, the managers and partners. Are they delivering, do they meet the targets, are they taking the company in the right direction?

  3. Team

    Who are the best and weakest performers? Are the team members cooperating well? What’s your employee satisfaction? 

  4. You as a leader

    What are your strengths and weaknesses? What do you need to learn or change to take your business to the next level? 

  5. Skills

    Review the skills available within the company. What are the skills needed to grow the business, what will be needed in the future? What do your employees need to learn? How to get better in the areas which are vital to enabling growth?

  6. Compliance

    Here I will presume that you already have metrics and KPIs in place.
    Are the targets met? What are all the metrics showing? Are the processes followed? Business metrics are the key to measuring your company performance and to keep growing. You may need to hire someone to keep an eye on the compliance to ensure that the daily operations are working well. 

  7. Finances and profitability

    Are you making a profit? Is your cash flow good? Can you improve your profit margins, can you increase your revenue or any other of your financial metrics? Do you have enough cash in the bank to keep you going for 6 months in case of a crisis? 

  8. Customer satisfaction

    Go through the customer feedback and find ten extreme reviews – five from the happiest and five from the most unhappy customers. Filter out the noise and focus on the reasonable points. What’s your customer retention? Is your customer service good? 

  9. Sales

    Analyse all stages of selling. Find what’s working and what’s not. Could you close more sales? Where do your customers drop? What can you improve to increase your sales by 10%? 

  10. How can the business grow

    Think about all possible ways to expand your business. How to penetrate the market, who are the best customers? Are there any new opportunities, new markets, new products, needs or innovations? 
    Are there any old things which are no longer profitable, aren’t working or aren’t worth the attention? What can you reduce to focus on the more lucrative markets? 

  11. Efficiency

    Are you using your resources well? Can you cut costs? Can you do the same in less time? Is there any new technology which could improve your efficiency? 

  12. Competition

    Are there any new players in the market? Did the barriers to entry change? How did your competitors evolve? Did their product offer, pricing or target market change? What are the market trends? Do you need to adapt? 

  13. Company culture

    When your business grows, unfortunately the company culture can weaken. While you are not close to the people working on daily operations, you lose influence and don’t know everything about your team anymore. How can you manage through your managers? Are they creating the right culture? What’s the team spirit? What is your message and is it coming through? Is the brand consistent with the company values? 

 

How often should you evaluate business performance?

Annual review

This is a quite extensive review. A full evaluation, following the checklist above, you should do once a year and spend on it at least one full day or two days of your work.

Quarterly check

Apart from that, ideally you should also run a brief quarterly check focusing on the most important, or problematic areas. This shorter inspection should take a few hours. 

When assessing your business, take your time. Find a quite place, ideally outside of your daily work environment to get some distance. Take an approach of getting curious and asking questions to gather information. While you may realise, there is a lot to improve, at the same time this is the moment when you can recognise how far you’ve come. 

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