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Business performance measurement

March 27, 2018

A while ago I gave a speech on business performance measurement and, to prepare, I searched on line and found many books on performance measurement, but they were for personnel performance, not for businesses where there were a dismal few. However, that’s what I have been doing my entire career, so was able to put together an enlightening presentation. That also got me thinking about the areas business owners and managers should concentrate on to improve their business’ performance.

For starters, here are some basic premises:

  • The purpose of a business is to make a profit, provide customers with value based products or services, support personnel with adequate compensation and a safe work environment, pay suppliers on time, and to be a good citizen of the area where the business is situated and for the overall environment.
  • To do this, products and services need to be priced properly and delivered in a timely manner, personnel need to be empowered to assume responsibility and to develop further, amounts due and payable have to be collected and paid timely and there has to be a plan for growth and business continuance.
  • The owners and managers need to exercise due diligence to accomplish its goals; and that includes engaging appropriate personnel and consultants and proper training for their staff. There also needs to be a recognition that not everything that ought to be done, can be done, and that priorities need to be assigned. When assigning priorities it is suggested that the most critical areas be dealt with first, not the easiest to resolve if they are low payback areas.

That being said, here is a listing of the areas where performance could be evaluated:

  • Sales including pricing
  • Production, product cost and margins, and quality
  • Distribution
  • Human resources including training, growth and development
  • Overhead and expenses
  • Finances and capital structure
  • Cash flow
  • Management
  • Leadership
  • New product development and product enhancement
  • Marketing
  • Risk management

Books can be written about each topic. My suggestion to business owners and managers is to be aware of your business’ performance in each area, question variations, look for changes, any changes, and changes in trends, look, really look, at your personnel’s activities and see if there are changes there, be in constant contact with your customers and the value you provide, and work at being a manager of your business. Whether you are starting up or a seasoned entrepreneur, the details need to be watched including being sensitive to what is happening in every part of the business and making sure the business is aligned with your goals and raison d’être.

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