Measuring success


Measure performance and set targets

The www.businesslink.gov.uk website is an excellent resource for small businesses to get practical advice. We thought this article was particularly useful and wanted to highlight this topic for all our customers.

The importance of measurement and target-setting
Performance measurement and target-setting are important to the growth process. While many small businesses can run themselves quite comfortably without much formal measurement or target-setting, for growing businesses the control these processes offer can be indispensable.

The benefits of performance measurement
Knowing how the different areas of your business are performing is valuable information in its own right, but a good measurement system will also let you examine the triggers for any changes in performance. This puts you in a better position to manage your performance proactively.

One of the key challenges with performance management is selecting what to measure. The priority here is to focus on quantifiable factors that are clearly linked to the drivers of success in your business and your sector. These are known as key performance indicators (KPIs). See the page in this guide on deciding what to measure.

Bear in mind that quantifiable isn’t the same as financial. While financial measures of performance are among the most widely used by businesses, non-financial measures can be just as important.

For example, if your business succeeds or fails on the quality of its customer service, then that’s what you need to measure – through, for example, the number of complaints received. For more information about financial measurement, see the page in this guide on measurement of your financial performance.

The benefits of target-setting
If you have identified the key areas that drive your business performance and found a way to measure them, then a natural next step is to start setting performance targets to give everyone in your business a clear sense of what they should be aiming for.

Strategic visions can be difficult to communicate, but by breaking your top level objectives down into smaller concrete targets you’ll make it easier to manage the process of delivering them. In this way, targets form a crucial link between strategy and day-to-day operations.

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