No business can survive without evaluating its business performance. Just like in school, how we review our subject preparation and how have we scored, businesses are no different. Once you have identified your market position and your hold, evaluating business performance will help you decide how to cross the next level. Reviewing your progress is useful in many ways:
- Helps you remove the uncertainty about how the business is performing
- How to make the most of the market opportunities
- Any revision needed in business plans
- How to get the next set of customers
- There is no better way to evaluate business performance than to have a close glance at your income statement, balance sheet and cash flow.
- You need to check the money flow of the business, this will give you an idea where you are losing money and which are the areas of improvement
- Evaluate is your sales target as per plan, which areas are giving you better sales and which are weak in numbers
- This will help in finding loopholes where sales are dropping
- Similarly, profitability is what keeps your business thriving. Steady profits with very low dips is a sign of steady growth.
One important principle to measure the success of small businesses is customer satisfaction. If the customer is not happy with your product or service chances are he is not going to come back againThere are a few ways of evaluating business performance on the basis of customer satisfaction:
- Ask for feedback; analyze the ratio of positive to negative feedback
- Take constant reviews, this helps in knowing what the consumer thinks of the product and can help you make changes for the better
- Assess your customer acquisition cost, if you are getting more customers this should be on the decline
- Keep a track of repeat orders, this shows that the customer is happy and is returning for your product or service multiple times
- Keep a close look on the market and keep evaluating your business performance with how the market is doing
- If your growth has slowed down and so has of your competitors, chances are the market might be going through a slowdown
- Everyone feels motivated when the tide is high, but if you find profits decreasing, don’t lose heart. It may be an indication to make some changes to your product, bring in some innovation and cut down unnecessary costs
- It is useful to do a SWOT (strengths, weaknesses, opportunities and threats) analysis to find out more about what your competitors are doing currently and what the market is saying about them
5. Conduct Performance Reviews
- Employees are your essentials- without them, the business can turn upside down. It is therefore essential to conduct quarterly performance reviews to evaluate business performance
- A performance review helps you gauge whether the employee can handle additional responsibilities or is he unhappy about too much work being delegated
- These reviews also help in maintaining a healthy competitive spirit in the company with everyone trying to give their best
- Keep your employees updated about what is happening in the market
- Organize skilling workshops and training sessions for them, so that the employees are satisfied with their skill development
- Employee satisfaction and training can go a long way in enhancing business performance
