4 important factors to consider
The instinct of many inexperienced business managers is to judge their success solely on the profit total at the bottom of their accounts. However, it is important to take a step back and consider the numerous contributing factors for that figure. Profits could be negated by large upcoming expenditure, the loss of unhappy staff, or the failure to foresee upcoming business challenges such as competitor growth.
In this blog, we’ll take a look at the monetary and non-monetary metrics for measuring business success. Experienced executives integrate a mixture of these processes into their analysis of business performance, thereby giving them clarity about its future direction. Here are four ways to judge whether a business is achieving its potential.
Unprofitability isn’t a disaster for a business, but it must at least show the potential for making money in the long term. Efficient and thorough record keeping is essential in providing clarity about financial performance, and there are many different calculations to consider. An MBA school offers expert insight into effective analysis of internal accounting data, so students can make the right management decisions after graduation.
The gross profit margin is a basic way of analyzing financial performance, but there are many other considerations to factor in. Are you generating a high return based on your assets or stockholder equity? How is your cashflow? These calculations often highlight issues which a simple gross profit margin may hide.
Entering the office in the morning to join a happy workforce is important for much more than just morale. High job satisfaction helps to retain the best workers, even when they might be offered better pay by a competitor.
Writing recently for The Globe and Mail, CEO of Vancouver-based ACL Services Ltd, Laurie Schultz, said that “having engaged employees at work is a clear sign of a high-functioning organization”. Conducting regular formal or informal discussions with staff about potential areas of improvement is a great way to increase engagement and create a more efficient business. Don’t forget to measure your own satisfaction too at this time, and assess whether you’re pleased with the direction of the organization.
Instant business success is very rare, so it’s important to set out a map for potential growth, including stated goals. Review these goals on a regular basis to ensure they are being met.
These goals could include the generation of a strong social media presence or high customer satisfaction. Both of these metrics are vital in spreading a positive message about the business, and it helps to increase profits as a result. They are also useful in finding out about the customer’s perception of a business. Members of the public may spot problems which staff members are unaware of, so make sure to treat them with the utmost respect.
Once you’ve produced figures to analyze business performance, it can be difficult to establish whether it’s achieving its potential. Competitive benchmarking is used by graduates of a business executives university to establish an organization’s performance against its rivals.
This information can be difficult to find, but there are some useful tips to keep in mind. SEO metrics, measuring online performance, are relatively easy to obtain, while some companies may release their financial results through press releases or the media. These figures may not factor in the upcoming loss or recruitment of an important client, but they still provide useful information about a business’s performance in the wider sector.
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