If you're running a small or mid-sized business, there's a good chance you're not operating as efficiently as you could be. The reason why is often the simple fact that you don't know what you're supposed to be tracking.
There are many areas of business in which examining a number of key performance indicators will help you get a better handle on costs to improve your bottom line. Doing so can also allow you to identify areas of your business that are poised for growth. One survey from the Australian Bureau of Statistics shows that the vast majority of businesses nationwide - 58 per cent - do not monitor any key performance indicators, and nearly 4 in 5 that do are primarily concerned with finance-related KPIs.
As an executive, you shouldn't want to be in that majority. At Ulton, we are well versed in the ins and outs of keeping a business running smoothly on a daily basis and will be able to help you find the best ways to identify and improve potential issues in this arena. These include the following areas to monitor:
While you may have a fairly good idea of how your customers or clients feel about their relationship with your business, how do you really know? When you can put together hard numbers around this issue - such as collecting information from online sources or distributing a quantifiable survey to every customer or client - you may be able to gain a lot of insight into what you're doing well and what areas may need improvement.
How you deal with these individuals or organisations likely says a lot about your company and how it's perceived, so it's very much worth tracking.
Whether it's how much you're spending to bring in new clients or employees, it's critical to know how much money goes out and what the return on that investment is. Your goal should be to truly understand all aspects of the costs you face so that you can get a better idea of areas you can streamline or expand in the recruitment or lead-generation budgets.
You're likely paying everyone on your staff a good wage, but you might not have a good idea of whether you're overpaying or underpaying them based on the work they put in. If you can do more to get a handle on how productive every employee is and what that translates to in terms of dollars and cents, you're far more likely to be able to identify areas of inefficiency. This is true both individually and collectively.
Building these metrics into part of a larger internal audit may uncover some real areas for growth.
How long does it take your company to generate a sale? What about to produce a product? How much are you spending per hour on those processes? If you don't know the answers to these questions, you need to establish KPIs that will better help you track them; doing so will allow you to better understand whether you're putting your operational energy or dollars to their best use.
Many of the above are only tangentially related to many of the traditional financial KPIs, such as margins, incomes and so on. However, a study from the University of Western Australia Business School and Australian National University College of Business and Economics found that, on average, the country's businesses only monitor around 11 non-financial KPIs. That number placed it well below similar countries like the U.K. (36) or Germany (34), as well as Pacific region neighbour Japan (20).
You should strive to go above and beyond Australia's average, and the tips included here are a great jumping-off point. If you're not sure how to set up reporting mechanisms for these areas of your growing business, working with the experienced business advisors at Ulton can light the way. We specialise in business advisory services that enable any company to start moving in the right direction and maximize your operational efficiency. Get in touch with us to grow your business today.