Measuring Key Factors

I've often discussed business with small business owners and found that they don't know some of the key facts about their own operations. Which products are making money? Which customers are bringing in profits? Which tasks are adding value competitively? Which facilities and equipment are paying their own way? They don't know. Usually the reason they don't know is that it takes time to collect this data and they don't see the point of doing that.

The reason for measuring key factors pertaining to the performance of your business is so that you can improve performance. If you can't measure it or if you haven't measured it, there's no point working on improving it - you might be making things worse. Measure performance, make changes, measure again. If performance has improved, make more of the same type of changes and put procedures in place to make the changes permanent. If performance hasn't improved or hasn't improved enough, backtrack.

One of the easiest things to track is profitability but, while profitability is always important, there may be other factors in your business which are even more important. Is on-time delivery critical for your customers? Is 100% availability of your service important? Does failure of your product cause high costs? After you have identified what is important to you, start measuring what is important for your customers. Measure these factors, improve them and your business performance will improve as well.

FIRST PUBLISHED AT SUITE101.COM