performance metrics

7 Performance Metrics You Need to Watch for Successful Business Operations

By Beata Green

Businesses are sometimes satisfied at looking at annual statements and projections for the sake of the annual report or the annual stockholder’s meeting. They may be getting shortchanged. There are several metrics or relevant business data that indicate areas for growth for a business. Businesses need not wait for that annual performance evaluation. These key statistics need careful evaluation vis-à-vis a company’s goals and strategies. They give light to numerous opportunities, unravel red flags, and dictate necessary modifications. More often than not, these metrics when left unnoticed may be costly, if not fatal.

1. Sales Revenue

Sales revenue, while it is obviously studied by every business, has deeper lessons that must be learned. It is no longer as simple as being satisfied when the numbers go up. Sales revenues must be tied to advertising strategies, earnings of competing companies, changes in trends, geographic and seasonal events, and similar occurrences. Sales revenue is not an independent factor but it is a product of different market forces that drive growth. These nuances will allow strategists to find a niche or bank on one’s competitive advantage to stay afloat or to lead the market. The more regularly that a business measures its profit margins, the more likely that it will stay on course.

2. Employee Performance

Employee performance is a key metric that is usually ignored, given the profit driven mindset in business. Employee satisfaction is key to giving birth to new strategies, maintaining and improving efficiency, and enhancing employee skills that will help grow an enterprise. Business owners must remember that employee productivity is key to growing a company. Contented and happy employees contributing to a team will mean a great difference to whether a company achieves its sales and marketing objectives.

3. Customer Satisfaction

Customer satisfaction ensures that people will return to do more business and a high level of it will make them talk about it to other people. Surveys, customer feedback, and rewards programs help a company rethink the way it does business and respond to unfulfilled customer needs. In this way, business is created by responding to such customer needs with new or enhanced products and services that will make the business grow.

4. Cash Flow

Cash flow will indicate the efficiency of business operations. Factors such as the relative speed by which accounts are paid by customers versus how fast suppliers are paid are highly important. Cash, in any case, is the lifeblood of any business. It fuels every action and every process within an organization. A company may be profitable but if outstanding receivables are kept unpaid for a long time, big problems may arise.

5. Strategy Implementation

Strategy implementation is the measure of how well a business achieved its general course. In view of different market forces, a business has to have a strategy to follow to remain profitable. A business should always evaluate whether the strategy was met, if it added profitability, and the customer or employee satisfaction. A business should assess whether the strategy is working, if it needs enhancements or if a strategic overhaul is necessary.

6. Inventory

Inventory costs money. To achieve the highest efficiency on how goods are warehoused or on how fast products are moved and delivered, a business must look at its inventory statistics. Are goods moved fast enough? Is the level of inventory commensurate to the level of sales? Could the business save money by increasing or decreasing inventory?

7. Price Margin

Price or gross margin is the amount added onto the base price of a product or service. A business should never forget the indirect expenses that must be factored in to the price of the good or service. For example research, among others, is one major expense that is sometimes not factored into gross margins. While the price margin may already give a decent amount of profit for a company, the prices set by competitors may allow some more leeway for additional profit. It will not hurt to add a few more dollars onto the price tag, as long as it does not affect product competitiveness.

With the advent of IT, businesses can accurately track their metrics easily. All that is needed is a conscious effort to mine the data and to carefully study them. Information gives every business owner the power to change things and make the business more flexible and responsive to needs, whether in terms of the customer or its employees.

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Beata Green
Beata Green is Director of HeadChannel Ltd., London-based bespoke software development company. She is responsible for overall strategic direction and overseeing the company’s continuing growth, building closer client relationships and maintaining best working practices. She enjoys brisk country walks with her red fox labrador and then relaxing in front of a TV crime drama with a glass of red wine.

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  1. These are very detailed metrics which I believe will help the company grow. Having a different set of metrics makes it easier to pinpoint the success rate of strategies implemented. Thank you for the post.

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