Measuring your business performance and setting targets are important processes for helping your business to grow.
Many small businesses can run themselves quite comfortably without much formal measurement or target-setting. However, growing businesses need to control these processes, especially if they want to, for example:
- expand the business by taking on more staff
- create new departments within the business
- appoint new managers or directors
Benefits of strategic business reviews
Strategic business reviews are useful if:
- you are uncertain about how well your business is performing
- you want to know how to get the most out of your business or market opportunities
- your business plan is out of date - eg you haven't updated it since you started trading - see prepare a business plan for growth
- your business is moving in a direction different to the one you had planned
- the business is becoming difficult or unresponsive to market demands
If you feel that your business needs to change in order to thrive or simply respond to market demands, consider implementing a formal change management process.
Setting targets for performance measures
Knowing how the different areas of your business are performing can help you assess the strengths and weaknesses of your business, as well as the factors you can change for the better. This should help you to manage your performance proactively and efficiently.
However, you need to make sure that you measure the correct areas of your business in order to get the right information. These are known as key performance indicators (KPIs). See more on deciding which key performance indicators to measure.
You should measure non-financial targets as well as financial ones. Consider the following areas:
- your customers - eg how many you have, how often they use you and how many customers you have lost or gained
- customer service - eg waiting times for assistance, complaints, or reasons customers have complained
- market share - eg whether your share of the market increased or decreased against competitors
- your staff - eg satisfaction levels, work quality or attendance records
Benefits of setting targets
After you identify KPIs and find the best way to measure them, it is important to set performance targets. This will give everyone in your business an idea of the targets they need to aim for, individually and collectively.
Break your main strategic goals down into smaller targets to make them easier to manage. By doing this, your smaller targets become more like day-to-day operations which, once completed, move you closer to your final goal.
Setting the business strategy
By creating a clear business strategy, you should be able to answer any concerns and have an idea of how to move forward and hit your targets.
Consider looking at:
- Your business direction - where you are now, where you want to go over the next three to five years and how you intend to get there.
- Your markets - now and in the future. Look at what markets you should compete in, how can you achieve this, and how will these markets change in the future.
- Market advantage - ask yourself how you can gain advantage over your competitors and outperform them in your chosen market.
- Resources your need to succeed - the skills, assets, finance, relationships, technical competence and facilities you need to compete. Determine if these are likely to change in the future.
- Business environment - including the internal or external factors that may affect your business' ability to compete.
- Measures for success - performance measures may change as your business matures.
You may not be able to answer these questions on your own. Consider asking input from professional advisers, fellow directors or senior staff to make your business review more effective.
You may also use the Investors in People's free business improvement tool - IIP Interactive - to assess your business' performance.
Find out more about strategic planning for business growth.
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- Comply with the law when providing goods and services
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- Understand pricing legislation
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- GDPR compliance checklist
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- Taking on contractors and subcontractors
- What you need to do about health and safety
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