Tuesday 23 December, 2008
A review of your business will identify any areas which are
working really well - and any which may require you to take action.
Being informed about the real drivers in your business is critical to
achieving results and optimal utilisation of all your resources.
How are you going to assess your performance as a business owner? Are
you getting any better? Are you improving your skills? Are your business
results improving? Apart from sales revenue and profitability, how do
you assess performance?
The only way to truly assess your performance is by the results you achieved in your business.
In a more competitive and demanding market, you need to get smart about
minimising risks, identifying new opportunities and understanding what
drives performance.
Ask yourself these important questions
- Which product or service lines are most profitable and make the greatest contribution to your business?
- Do you need to change the mix of your product/service portfolio in
any way? (When assessing products or services, think about factors like
length of sales cycle, volume of sales, profitability, how easy is it to
sell your products or services, repeat sales, support revenue and
costs, pricing, cross-sell and up-sell compatibility, etc.)
- Do you acknowledge and nurture your best customers?
- Where will your growth come from this year? Will it be from your
core business and customers, or from somewhere new? (Where did it come
from last year, and was it enough?)
- Will you be able to fund your growth? What options do you have?
- Where is the biggest exposure in your business? What needs to be done to address it?
- Do you have the right systems and infrastructure in place to support your goals and priorities?
- Do you know what the key measurements are to assess the overall
progress and performance of your business, and can you report on that?
- Do you have the right team? Do you have resource gaps?
- What changes could I make (as the CEO) in what I do, to improve the performance of the business?
Here's a quick report card checklist to assess whether or not you are worthy of an ‘A'!
Report card checklist
This quick and easy report card will help you uncover the real status of operations and performance in these key areas:- Finance
- Sales
- Marketing and promotion
- People
- Products and services
- Customers
- Processes and systems / production
- Planning and goal setting
Table A
|
Sales
|
Poor
|
Satisfactory
|
Needs work
|
Good
|
|
Sales revenue
|
|
|
|
|
|
Sales tools
|
|
|
|
|
|
Sales team use of time
|
|
|
|
|
|
Lead generation
|
|
|
|
|
|
Pipeline building
|
|
|
|
|
|
Forecasting accuracy
|
|
|
|
|
|
New customer acquisition
|
|
|
|
|
|
Relationship building
|
|
|
|
|
For example, 'sales revenue' may have come in under budget for the last 12 months (or 6 months, whatever basis you are working on). If it's just under budget, you may rate the sales revenue as ‘satisfactory'. If it came in well under budget you may rate it ‘poor'. If you made budget, but you know you could have achieved a better result, then a rating of ‘needs work' would probably be appropriate, and if you came in well over budget you'd definitely categorise the sales revenue result as ‘good'.
Be objective and very honest when you work through this for each area of your business, and make sure to use criteria that are appropriate for you.
For example, if you sell through a network of distributors, then ‘channel performance' or ‘channel' may be a criteria. If you sell both in your local market and in export markets, you may separate ‘sales revenue' into ‘sales - domestic' and ‘sales - export'.
How do you rate?
In conjunction with this assessment process, it is always a valuable exercise to survey your staff/customers/suppliers as appropriate. They ARE your business and you need to know how you are performing, from their perspective. It isn't necessary to conduct these surveys too often, but they are a useful benchmarking tool to use from time to time.When you've been through all of the broad functions of the business (such as sales, finance, etc.), give each area an overall rating. Again, draw up a chart with performance rating across the top, the operational area along the left axis (sales, finance, people, etc.), and tick your ratings in the right columns (Table B).
If an area is generally in pretty good shape, and scored mostly ‘good' ratings, but one or two aspects rated a lower score such as ‘poor' or ‘satisfactory', it would be worth your while to address those underperforming areas now, before they affect the good parts of the business or area that is working well. As they say, "Prevention is better than cure".
In our example, the sales area may have had the following results:
|
Sales
|
Poor
|
Satisfactory
|
Needs Work
|
Good
|
|
Sales revenue
|
|
a
|
|
|
|
Sales tools
|
|
|
a
|
|
|
Sales team use of time
|
a
|
|
|
|
|
Lead generation
|
a
|
|
|
|
|
Pipeline follow through
|
a
|
|
|
|
|
Forecasting accuracy
|
|
a
|
|
|
|
New customer acquisition
|
a
|
|
|
|
|
Relationship building
|
|
|
|
a
|
From this you can see that new business development / pipeline building is a weakness in the business, but building relationships with existing clients is a strength. Sales tools are satisfactory, but could do with a bit of work to make them even better.
When you review each area of your business, put a score in the ‘summary' box for the number of aspects that are ‘poor' in each area. For example, the sales area of this business has 50% of its key drivers that are basically ineffective! This is a red flag area that requires urgent attention.
Report card summary
Table B
|
Categories
|
Poor
|
Satisfactory
|
Needs Work
|
Good
|
Summary
|
|
Sales
|
4
|
2
|
1
|
1
|
4/8 (50%)
|
|
Finance
|
|
5
|
1
|
3
|
0/9 (0%)
|
|
Marketing & Promotion
|
2
|
6
|
3
|
2
|
2/13 (15%)
|
|
People
|
7
|
4
|
0
|
0
|
7/11 (64%)
|
|
Products & Services
|
0
|
0
|
4
|
3
|
0 (0%)
|
|
Customers
|
5
|
5
|
7
|
1
|
5/18 (28%)
|
|
Processes/Production
|
8
|
3
|
1
|
2
|
8/14 (57%)
|
|
Planning & Goal Setting
|
3
|
0
|
1
|
2
|
3/6 (50%)
|
The other numbers above for the remaining areas of the business provide some insights as to what the business owner needs to focus on. The highlighted areas would be a priority. For example, 64% of the drivers behind how they measure the performance and effectiveness of their people, are in the ‘poor' category.
This report card is a direct reflection on business performance over the last year. Would you give the owner of our sample business an ‘A'?
When you've done your own report card you'll be able to see at a glance the overall status and performance of your business, and take the appropriate course of action:
- No action required (big tick for your performance - or maybe you haven't been completely honest in your evaluation ...)
- Identify priority areas which require attention
- Decide what action needs to be taken
- Implement improvements
- Review progress in 1, 3, 6 or 12 months time as appropriate
- The strategy required - which will focus you
- What you then have to do - which will improve your operations
- What you need to measure in the follow up review - with results as the outcome
- It will have measured your performance as the driver of the business
- Finally, if you are underperforming in any areas of your business, it will help you to make changes which result in improved performance
Monitor the vital signs
The most important indicators that you must constantly watch and attend to are:- Cashflow and available funds
- Sales, and plenty in the pipeline
- Overheads kept low - don't let them creep up
- Know where you're going (have a plan)
- Put systems and procedures in place as you go (so you can delegate as the business grows and maximise your return on current resources)
Author Credits
Jenny Stilwell is the Managing Director of BOSSMENTOR®, a
consultancy providing advice on strategic growth, structure and people
mentoring and development. For further information, please visit the web
site: www.bossgroup.com.au
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