Whether you are just starting a business or expanding an existing one, it is important to assess the performance of your enterprise and determine your growth. This is when success factors come in.
Below are the tools you can use to analyse how your business is doing:
1. In business, cash is might – You may have many receipts to show a significant number of sales made. But, these are not enough. Business performance is best analysed with the use of financial statements. These serve as visual summaries of the operations and overall indicator of financial health.
Create your Profit and Loss (PNL) Statements, Equity Statement, and Cash Flow Statement to see the breakdown of your sales and expenses, the return on equity, and the liquidity of your business. The PNL may show revenue, but the cash flow statement may indicate that you do not have enough funds to cover expenses.
Aside from financial statement analyses, many financial rations and indicators can help you make sense of the numbers. Employing the assistance of a consulting company can help minimise your workload in this aspect.
2. The power of keeping people – The value and productivity of the business staff is also a good measure of how the business is doing, especially in service-oriented businesses. Increased productivity means that the business is efficient and is able to close more transactions, which, in turn, generates more revenue.
The turnover of employees is also an important indicator, as it shows the competitiveness of the business in providing fair compensation and a good working environment. Make sure to have a system to track employee productivity and adjust the compensation and benefits package to boost performance.
3. The customers are always right – Monitor customer satisfaction through feedback in surveys and the number of repeat customers. The success of the business does not depend on each individual transaction; it is built on lasting customer relationships that generate multiple sales over time.
Success in business entails many things. In a nutshell, you should have the capacity to pinpoint the direction that you want to take and set the right goals for your venture.