Having set goals and objectives for your business is essential to providing a trajectory to follow. By having these targets in place, you can create an action plan that enables you to achieve them, motivates your workforce and keeps everything moving in the right direction.
However, it’s not enough just to have goals. You need to continually assess your progress towards those aims to experience any form of growth. The only way to know how well you’re progressing is to track your business performance.
Tracking business performance will mean different things to different people. Essentially, it’s looking at the metrics that matter to your company over time and determining how they are changing. In this sense, it can show you how near to your targets you are. If you aren’t, it could suggest it’s time to implement a new game plan.
Monitoring performance can also help you to understand your business better by analysing recurring trends. For example, if you find you have peak sales volume at a particular time of year, you can position your activity to fuel and serve demand at this stage while coming up with contingency plans to support cash flow and revenue in your off-peak months.
When analysing performance, you need to track the appropriate metrics to get an adequate view of your progression. This means understanding your goals and finding relevant data to measure them.
In this guide, we explain how to track business performance in a way that’s aligned to your goals and tells you what you need to know.
Make sure you’ve set tangible goals
The first step in being able to track your progress is ensuring that you’ve set measurable goals.
For example, consider a goal like “We will serve our customers better” against “We will improve our customer service (CSAT) score by 10 points”. The first is general and vague. How do you define serving customers better? What will it look like if you achieve your target? The second goal is pursuing the same theme (improving customer experience) but places the metric of a CSAT score behind it so that you can actively measure your progress.
A great way to make a goal tangible is to attach a specific target to it. For example, if you want to pursue sales growth, fix a percentage to your goal that shows how much you will increase sales. This will give you a benchmark to work towards.
Ensure that every objective you set has a straightforward method for analysis. This will enable you to monitor performance in these areas, giving you data that you can use to identify when that objective has been fulfilled or when you need to change tact because things aren’t going according to plan.
Identify the metrics you will use to track
Once you have agreed on your tangible goals, it’s time to focus on how you will track them. The metrics you use will depend on what it is you are trying to achieve. In the customer experience example given above, a CSAT score works as a metric as it reflects customer satisfaction levels and shows how happy people are with your business.
If you aim to grow your sales base, you will likely track metrics like monthly sales. However, on top of this, you might want to analyse sales from new customers versus returning customers to determine the shape of your customer base.
Essentially, you need to decide what insight you need to get to know if you are progressing towards your aim and find metrics that align. This will offer you data points for every objective you set and make it easier to monitor your business performance in accordance.
Ensure you have the resources to track your goals
Once you’ve decided which metrics you will use to monitor your goals, you need to ensure you can review those metrics. Depending on what data you are using, you may need access to specialist software or platforms that will enable you to access information when you need it.
You might also need employees to gather data for you. If it’s financial information, this may mean utilising a bookkeeper or accountant. Similarly, if the data is specific to one department, you will likely need a representative from that area to pass on insight regularly.
In some cases, you may need to actively go out of your way to get data, such as through customer surveys or market research. This can be a sizeable task, so you need to make sure you have the time and skill to carry out the work effectively.
By making these considerations early on, you will refine your metrics to those you can easily access and put the necessary preparations in place. It will also enable you to determine who will be responsible for data collection across your company so that the relevant stakeholders know when to gather and pass the information on to keep things running smoothly.
Set a timeframe
Next, you need to set timeframes. You need to decide two timeframes: how long until you will fulfil your aim and how regularly you will monitor progress.
The amount of time you give yourself to ‘finish’ a goal largely depends on what it is. Most companies will have a mixture of short and long-term aims that feed into one another. A short-term goal may last for the month or the quarter, while a long-term goal could take a few years to achieve. You ultimately need to give yourself a reasonable amount of time to fulfil a target while still presenting enough of a challenge to empower your business to improve performance. Once time has lapsed, you will need to review progress and determine if you have met your aim.
The length of the goal will also affect how often you monitor its progress. You might review it monthly or quarterly, but if that goal only lasts a month, you will likely want to analyse it more frequently. You will want to have regular monitoring as this will allow you to continually track progress and take action when needed.
Many businesses will utilise monthly, quarterly or yearly reports that give insight into various metrics. If this is something you are doing, you need to make sure your workforce is bought into the timeline to help you achieve these goals and run their part of the reports on time.
Collate the data regularly
When reviewing your business performance, it’s important to note down what you have found. By doing this every time, you can start to build a bank of data that will enable you to analyse trends, plot trajectories and witness how your goals are progressing over time.
This can shape future goalsetting by showing where you have performed well and how long it took you to achieve certain aims.
Collating insight into a written document is also helpful in informing stakeholders. Investors, directors, and partners will all need regular updates about your business and how it is faring. Having a record to circulate to them can provide insight and answer questions. This will keep everyone involved in your business tuned in with your objectives and their progress.
Make action plans when necessary
We track business performance to see when things are going well and when they’re not. If there’s a red flag in your data, it could represent that something isn’t going according to plan. Taking action early on can limit any damage and may even get you back on track.
Each time you undertake a review, keep your goals and targets in mind and ask if everything is moving as it should. If an area is experiencing slow progress or worsening, it usually means you need to change course. This could be because the context has changed or the activity you are undertaking isn’t working as effectively as predicted.
Spend time trying to determine what is happening and then look at what you can do to change it. Ensure any amendments are communicated with your workforce so everyone is on board with the new process. Then, go back after some time to see if it has the effect you want – if not, you must return to the drawing board.
The more often you carry out performance audits, the more aware you will be of the trends of your business. It may be that certain metrics are always lower as specific periods, such as in off-peak seasons. This will help you to refine your strategies over time as you learn what works and when.
Share the news
When reviewing business performance, you should share the news of your findings with your team, regardless of what it is. If you are meeting or exceeding targets, it can significantly boost morale and show employees that their hard work is paying off. If you’re behind target, it can show where there is room for improvement and keep people focused on the best route forward.
Sharing your performance can also help people to learn where your business successes and weaknesses are. This can be embedded into their jobs, whether using strengths to your advantage or examining what departments can do to overcome weaknesses and improve.
By keeping everyone in the loop regarding your goals and progression, you can ensure all your team is focused on the same priorities and playing their part.
Get advice
Every business wants to perform well, but it’s only by monitoring your progression and setting goals that you can determine how successful you are.
By understanding what progress you wish to see and the metrics you will use to track it, you can implement regular reviews into your operations and share your findings with all relevant stakeholders. This will keep everyone aligned with your aims and give a realistic picture of how you perform, allowing you to act when required.
If you seek to move your business forward or struggle to achieve your goals, speaking to a business advisor can help.
At Pegasus Funding, we can speak to you to determine what your aims are and what obstacles might be present. We can also discuss financial support that could assist you in your target by boosting cash flow and facilitating growth.