To maximize the information at your disposal, you must learn how to accurately examine and evaluate your performance. 

1. Measuring performance 

Understanding the performance of your business's many divisions will enable you to identify areas of strength and weakness as well as elements that may be improved. Such knowledge ought to assist you in effectively and proactively managing your performance. 
In addition to taking financial aims into account, you should also assess non-financial ones. Other places you may want to think about are: 
• Customer service, including wait times for help, complaints, and the reasons behind customer complaints 
• Market share, including the number of customers you have, how frequently they use you, and the number of customers you have gained or lost 
• Your employees, such as their job quality, attendance records, or satisfaction levels 

2. Measuring your financial position 

Creating and putting into place reliable financial and management systems may be essential to the success of your firm. Many companies fail as a result of inadequate financial planning or management. 
You may reevaluate your business objectives and make more strategic plans for growing your company by reviewing your financial performance. When reviewing your company's finances, you may wish to take the following into account: 
• Cash flow: This statistic is the total amount of money coming into and going out of your company. Make sure you check and update your prediction frequently. 
• Working capital: Do you now have different needs? If this is the case, please investigate the reasons behind this trend and assess how it compares to industry standards. More funding is needed; take action to get it. 
• Cost base: Review your expenses often. Make sure your expenditures are included in the amount you charge, but don't make your clients foot the bill for any inefficiencies in your firm. 
• Borrowing: How are any loans or overdrafts doing? Are there less expensive or more suitable financing options available to you? 
• Growth: Do you have strategies in place to modify your funding to meet the evolving demands and expansion of your company? 

Calculating your return on investment 
Your profitability is one of the most crucial elements of your finances that has to be examined. The majority of expanding companies want to make more money in the end, so understanding profitability measurement is critical. The key benchmarks are: 
• Gross profit margin, commonly referred to as the contribution, is the amount of money left over after deducting direct sales expenses. 
• Operating margin: this is the area of profitability that falls between gross and net measurements. Interest and tax payments are not included, but overhead is. Because of this, it's often referred to as the EBIT (earnings before interest and taxes) margin. 
• Net profit margin: This approach approach is a far more limited way of measuring profits since it includes all expenses rather than just direct costs. The profit computation takes into account all overheads in addition to interest and tax obligations. 
• Return on capital employed: this figure indicates how much of a company's total capital is used for net profit. This information enables you to compare the performance of the funds invested in your firm to those of other possible investments, such as placing them in a bank. 
Additional important accounting ratios 
Other widely used accounting ratios provide helpful indicators of how well a company is doing. These consist of
 • Liquidity ratios, which provide information on your capacity to pay short-term debts; 
• efficiency ratios, which indicate how well you are using the resources of your company 
• Gearing ratios, or financial leverage, which indicate how sustainable your long-term debt exposure is 

3. Measuring your customers 

Every firm has to focus on attracting and keeping consumers. To choose which aspects of your organization to measure and analyze, it is worthwhile to consider whether or not you have a complete understanding of your clientele. 
Going over your markets again 
A strategic business review gives you the chance to take a step back from the work you have planned and reevaluate things like 
• market shifts; 
• new and developing services 
• Modifications to your client's demands 
• outside variables, including the state of the economy, imports, and new technology; 
• changes in the level of competition 
You may stay focused on your alternatives for development by considering your company from the viewpoint of your consumers. 
Client feedback is crucial; the more you understand about your client's needs and desires, the simpler it will be to manage your clientele. Seek as many methods as you can to record this data, such as: 
• Sales data: Your customers' purchases—or lack thereof—give the best indicator of their preferences. 
• Complaints: Keep in mind that a lot of clients will just move suppliers rather than file a complaint; 
• Questionnaires and comment cards: These are excellent sources of information, so think about offering incentives to get more customers to fill them out. 
• Social media: this is a helpful approach to getting input from customers.
• Mystery shopping: having someone pretend to be a customer for research reasons may give you an obvious idea of how well you are doing. On the other hand, you may benefit from a customer's bad feedback, provided you address their concerns. It demonstrates your concern for your clients.
Finding areas for improvement in your personnel numbers, company processes, or goods or services may be facilitated by soliciting feedback from your consumers. 
Expand your emphasis outside your present clientele. 

The simplest method to boost sales may be to sell more to current clients, but most companies hoping to expand significantly will also need to figure out how to reach new markets. 
Therefore, it's critical to learn more about market segments that you haven't previously explored. 

4. Measurement and your staff 

Your workforce is probably going to grow as your company expands. You may need to come up with more official methods of performance evaluation if you want to stay on top of how your employees are performing. 
Assessing via conferences and evaluations 
One extremely practical and straightforward approach to tracking and supporting each employee's growth is via informal meetings and more formal assessments. 
They provide open communication between all parties and may be used to increase performance and productivity by establishing goals for employees and tracking their progress toward them. 
Annual employee reviews are a good idea if you want to monitor a worker's performance and learn what they think of the company. 
Holding regular staff meetings may also be a very helpful approach to monitoring broader trends inside your company. These meetings often provide an early warning system for significant issues or changes that may otherwise take some time for your management team to become aware of. 
Quantitative evaluation of worker productivity 
Analyzing staff performance in terms of money may be a highly useful management technique. The most often used metrics for reporting on the whole company are profit per employee, sales per employee, and contribution per employee. 
These metrics may highlight topics that may subsequently be discussed in further depth at such sessions, but they shouldn't be considered a replacement for the more comprehensive assessments mentioned above. 
It is simpler for certain industries and worker types to express employee performance statistically than for others. For instance, it needs to be rather simple to determine the sort of sales a certain sales representative has made or the number of units that factory workers make in an hour at work. 
However, these types of actions may be used in almost any industry or corporation with a little extra work. For instance, you may determine the most lucrative use of an employee's time by looking at their timesheets to see how many hours they spend each month on various projects or clients that fall within their purview. 

5. Comparing your business's success to others 

By comparing your company's performance and potential to those of other companies, benchmarking is a useful tool for understanding both. 
Against whom to set standards 
Comparing yourself to companies in the same industry is typically beneficial. The precise comparisons you want to make, however, will depend on several factors, including your goals and your position in the market. 
A tiny company in a crowded industry, for instance, would choose to compare its performance to the industry average, whereas a company looking to develop quickly and significantly might prefer to compare itself to an established market leader. 
Within your company, internal benchmarking is another option. You may be able to implement effective working methods from the highest-performing divisions of your company by, for instance, comparing the absence rates across departments. 

How to measure things 
When it comes to selecting which performance measurements to utilize, benchmarking often follows the same criteria. You have to concentrate on your main drivers, the things that propel company accomplishment in your industry. 
Methods for Benchmarking 
Since you need to have easy access to all of your company's financial information, acquiring external data for comparisons is sometimes the greatest obstacle when it comes to benchmarking. 
There are many places to get information of this type: 
• Your trade organization is a good place to start since these businesses often compile information for the whole industry. 
• Commercial market reports may provide additional information, but they can be expensive. 
Making use of your benchmarking information 
The goal of benchmarking data is to encourage improvements in your business's operations, just like any other performance measurement data you create. 
The process usually entails establishing goals to assist you in reaching the benchmark values you are striving for. 

6. Analysis of competitors 

After operating your company for some time, you will most likely have a deeper understanding of your rivals than you had when you initially began. Although it may take time, money, and effort to do competitor analyses and market research, there are several advantages to being more aware of what your rivals are up to. 
What you should be aware of 
The kind of competition data that will be most helpful to you will vary depending on the kind of company you run and the industry you serve. You should find out the following information about your rivals: 
• what they provide; 
• who they are; 
• How much do they charge for their goods? 
• How their client base and demographics compare to yours; 
• how their competitive advantages and weaknesses contrast with yours; 
• How they will respond to any adjustments you make to your offerings or prices. 
Doing a SWOT (strengths, weaknesses, opportunities, and threats) study will be helpful. This data will display your performance against the market as a whole and against your nearest rivals in particular. 
How to learn more 
To learn more about your rivals, there are three basic methods to do so: 
• Their statements are made on sales materials, commercials, news releases, exhibits, websites, social media accounts, shared suppliers, and visits by competitors. 
• What do other people—your sales staff, clients, online resources, newspapers, analysts' reports, and market research firms—have to say about them? Examining their social media interactions with clients may also be helpful. 
• Commissioned market research: If you want additional in-depth data, you may choose to work with a group like the Market Research Society (MRS) to commission specialized market research. 

Refer to our article on defining goals and KPIs.