Performance: Understanding The True Measure of Sustainable Success
Article 4 of 6 about the key ingredients to efficient business operations
When was the last time you checked under the hood of your business? Just like our cars, the many working parts of a business need a routine check to ensure they’re performing as well as they’re designed to.
If not, even the fastest, most expensive, luxury car will suffer a pretty short lifespan because of all the wear and tear.
This is why performance management is crucial for your business.
Success isn’t always about revenue
If all you’re really focused on is your monthly revenue and ignoring the performance of your working parts, you’ll be in the junkyard sooner than you hoped. Successful business owners are always evaluating:
- Am I getting the most out of my team?
- Am I wasting money in areas?
- Am I spending way more time on things than I should be?
- Are there areas I can be running far more effectively?
- Do I know who is responsible for what?
- Am I even on track with why I started my business in the first place?
That said, if you’re not already tracking performance of each aspect of your business, I get it. It’s not fun dealing with all those not-so-fun parts of running a business. Not to mention, you’re feeling way too busy at this point to create a new system.
But trust me on this: having the right framework in place to regularly assess each aspect of your business’ performance:
- Saves you a boatload of time once it’s in place
- Is easy to get started – I’ll help you right here
- Helps turn those not-so-fun parts into not-so-bad
Set targets for your business AND team
Performance management means consistently monitoring how well all the components of your business are working compared to how well they should be working. Otherwise, numbers like sales revenue, acquisition costs, administration costs, wages etc. are just arbitrary numbers.
Are they good?
The best way to evaluate if you’re on track for sustainable, healthy business growth: set performance targets for both your business and your team (because team performance has a guaranteed impact on business performance).
It also allows you, as the owner, much more control over each facet of your business, and saves you soooo much time in decision making and pinpointing inefficiencies. If something or someone isn’t performing up to a standard you’ve clearly set, it may mean a fix…or a total replacement.
4 easy steps: How to initiate a Business Performance Plan
Step 1: Select 5 key metrics that clearly show how you’re doing against your core goals. These might include (example list):
- Sales revenue
- Customer acquisition cost
- Customer retention
- Profit Margin
- Staff productivity
- On-time delivery
- Customer satisfaction
Step 2: Set up a process to record data of those metrics routinely (weekly, monthly, annually).
Step 3: Regularly review the results of performance vs. targets you’ve set (weekly, monthly, annually).
Step 4: Take action! Where something is not on track, address it.
4 easy steps: how to initiate a Team Performance Plan
Step 1: Ensure each role has 3-4 clearly defined responsibilities
Step 2: Establish performance objectives for each responsibility
Step 3: Hold regular one-to-one meetings (I recommend monthly, at minimum) to review performance, constructively address any challenges or issues, and honour and celebrate the heck out of targets being met!
Step 4: Take action! Don’t avoid the tough conversations. It just hurts everyone more in the long run – especially you, as the owner.
A well-oiled machine lasts and lasts
Car parts left to their own don’t last forever. However, cars that last the longest on the road are the ones that have their parts maintained regularly.
In business, healthy, sustainable growth requires getting the most out of all your working components at all times. Sure, things may fluctuate, but this is why performance targets are so useful in:
- Knowing that your numbers actually mean “success”
- Pinpointing where inefficiencies are occurring – clearly, quickly, and easily
- Allowing you to elevate your team to operate optimally (and in turn, happily!)
Click here to book a FREE 30 minute call with us to discover how we can help you set targets and implement a Performance Management Plan.