How do you assure that your business is improving and reaching the goals you have set? There is no Magic 8-Ball that will tell you that your small business performance is on track. Only you have the power to discover your true small business performance, and the way to evaluate your small business performance is by regular review.
What Are Your Key Indicators?
Reviewing your small business performance requires you to determine what standards and specific information you wish to evaluate. Do you want to improve gross revenues by 12 percent each year? Want to increase sales leads by 5% each year? Perhaps you have a goal to reduce expenses by 20 percent by the end of the year? Figure out what key performance indicators you will use and make sure you have a way to keep track of them.
Gather the Tools and Information
With your key indicators in hand, how will you evaluate and assess them? You must make sure you have ways to collect and evaluate the information you need.
An abundance of information can be gleaned from your typical financial statements. Income and expense information are found on the Income Statement, and your assets and liabilities are found on your balance sheet.
However, some indicators may need special tracking tools, such as a custom database that monitors your sales leads, number of specific business units sold, or even your employee turnover. Use Excel spreadsheets to find variances and make charts or graphs for easy visualization of your numbers.
When to Measure
At what intervals will you review your small business performance? Every month? Every quarter? At the end of each fiscal year? The more frequently you can review your small business performance, the better opportunity you have to make small improvements or changes that will keep you on track to meet your goals.
Financial data should be reviewed at least once per fiscal quarter. Expenses like cost-of-sales might be reviewed once a month to assure that you are not overspending. Determine when you want to make your reviews and assessments and stick to your schedule.
How to Know if You Need To Make Improvements
Remember, you are the one reviewing your own small business performance. You must keep a critical position and be strict with yourself when you evaluate your measurements. Did you set a goal for 15 percent increase in sales per year, but are averaging only 1 percent increase per month? Form a new or improved strategy to meet those sales goals. Are your expenses getting out of control? Set new and stricter parameters for your budget and stick to them so you meet your goal by the timeline you set.
The key to meeting your goals is not to set a single strategy. It is making small and incremental improvements and changes along the way that will keep you on track. Set a goal to review your small business performance on a regular basis, and you will find that your business will hit more targets than you have set for yourself.