Best Practice, Better Business
For busy entrepreneurs, finding the time to measure business performance is not always easy, but it is vitally important.†The reason why so many businesses - particularly high performing businesses - measure things is to have more control over the destiny of their business.
Following best practice ideals keeps you up to date with developments in your industry and competitors. By continuing to learn and develop, you are giving your business a competitive edge that will be hard to beat.
We will look at a variety of ways you adopt best practice in your small business. In this article we look at the power of Key Performance Indicators.
Aspects of your business where best practice applies include:
- how staff are recruited
- making use of new technologies
- marketing and public relations strategies
- product development and production
- sales procedures
- reducing waste
- adding innovations into your business
- training staff
- reducing overheads and running expenses
- monitoring supplier choices
- quality assurance procedures
- product distribution
Key Performance Indicators
One of the most common methods of monitoring performances within your operation is to introduce and measure certain key performance indicators (KPIs). These provide you with a quantifiable measurement of staff performance across the areas that most affect your business' ability to reach financial targets. Selecting suitable KPIs will help you break down the core activities of your business and monitor any shifts affecting its progressover specific periods. This can helpdirect future business decisions and identify areas of the business requiring extra attention. Incorporating KPIs into your business usually involves setting and measuring personal targets for individual staff members or departments.
They may be used to measure such areas as:
- unit sales
- profit per item
- product quality
- customer service
- time required to complete tasks
- customer referrals
- staff turnover
The areas you choose to measure should relate directly to the core activities of your business. Because of this, KPIs will differ depending on your specific business type, operations and industry. Although businessesin the same industry will not necessarily utilise the same indicators, KPIs for all organisations should:
- be tied into the overall business objectives
- measure areas directly influencing the business' ability to succeed
- indicate areas requiring further action
- For your KPIs to be useful, you will need to be able to measure them over time. KPIs should allow you to set measurable and achievable goals for improving core business activities.
Revision and review
After introducing a method for examining and recording KPIs, make sureyou maintain records of your results. The process for recording KPIs should be continually reformed and reviewed with your changing business requirements in mind. To achieve this, regularly reconsider your performance indicators alongside the ongoing development of a business plan.