By Analytix Editorial Team
Businesses may be started as the result of a dream, but they have to be nurtured to success and profitability on the basis of hard work, well-informed decisions and sound planning at all levels, including finance and investment decisions.
However, business success is less about gut feelings and guesswork and more about correctly-timed decisions that are based on real information regarding the company’s performance.
A big part of business success lies in making the right decisions at the right time. This differs from depending upon instinct or the ‘gut feeling’, as it may be put at times. Guesswork can also harm business prospects.
What differentiates a highly successful business from one that performs at average levels?
Most traditional businesses start with an eye on profits and the aim of making quick money. But unless accompanied by information and feedback on how each aspect of the business operations is performing, profit making activities may flounder. Performance measurement is critical in providing business owners with key operational insights and the means to handle challenges and gaps in meeting business goals.
Neglecting to measure performance regularly and taking corrective measures is a big reason for businesses not hitting the growth curve, or failing to take off.
Traditionally, some of the problems associated with performance measurement are:
The importance of metrics
Metrics can be seen as report cards that gauge and inform you about how your company is performing. Professionally managed KPI reports and management reporting can provide business owners with practical and useful insights into better management of business and strategic goals such that it results in success.
How do these performance results help? They help make better business decisions at all levels: product manufacturing, introduction into market, introduction to target audience, alignment of operations and production values with strategic goals, etc.
Tools of performance measurement, including KPI reports, provide a significant insight into the gap between goals and actual business performance. How do they help? Often, they provide critical metrics that help in:
KPIs and management reporting help drive the company in a concerted move towards achieving its strategic goals while assisting business and management decision making. Apart from moving towards pre-determined company goals, management reporting also helps businesses take stock of their competitors’ efforts and work towards meeting any gaps that need addressing.