When you’re setting out to improve something, you need to set a goal and ensure you’re your progress is measurable. You must be able to stand there at some point in the future and show that you have improved. It’s easy to jump on the scales and say that you have lost weight; to lift more weights than usual to show that you have increased your strength; or to run a personal best time to show that you have increased your fitness. But what can you do to measure the growth and success of your business? We have identified some key performance indicators that you should regularly monitor to follow your business’ progress.
Have up to date accounts
Having up to date accounts is a great place to start. While you may already enter your data to your accounts on what feels like a regular quarterly basis, try to update them more constantly. There is no point attempting to gauge the current performance of your business on a report that is three months out of date. Try and ensure that the accounts for each month are updated on a monthly basis, and run profit & loss, sales, cash flow reports and/or other reports relevant to your business goal to monitor your business’ performance.
Measure the right indicators
Perhaps one of your business goals is focused on increasing website hits, or increasing the number of customer or client enquiries that are converted to sales or business, or increasing the average amount spent by customers, or even increasing the profit margin that you make on the products or services you provide. If this is the case then you need to ensure that you are conducting reports that portray this kind of information. There is no point running and relying on a profit & loss statement if you are primarily concerned with increasing the amount of return business provided by your loyal customers. You may need to think outside the square to come up with ways to measure the performance relevant to your goal, such as by having successful customer feedback mechanisms in place, or by providing your customers with a loyalty card that allows you to record the amount of return business that you are receiving.
Compare your performance against benchmarks and present your data in ways that will allow you to easily identify trends
To determine progress you need to make comparisons. These can be comparisons with past periods or with industry benchmarks relevant to your business. It is also a good idea to compare your progress with forecast reports that you previously had prepared. As it is often easier to spot trends visually or through the use of percentages, we suggest that you incorporate percentages, charts and graphs when comparing your performance.
Interpret your reports properly
There’s nothing to gain from running constant reports if you can’t interpret them. Financial reports can be hard to understand, so seek the support of an accountant if necessary to ensure that you are reading your outputs right.
Act on your results
Monitoring your business’ performance properly will identify areas that you can improve on. By implementing targeted practices and procedures in your office to improve on flagged areas, your business will move from strength to strength and be well on the way to achieving your goal.
The experienced team of accountants and lawyers here at The Quinn Group can help you get your business back on track. If you are unsure of how to monitor your progress, or unsure how to run and interpret appropriate financial reports, please don’t hesitate to contact us on (02) 9223 9166 to make an appointment, or submit an online enquiry today.