Whether your company is feeling confident or concerned in a time of economic uncertainty, business performance improvement should always be a priority. But how do you undertake a strategic plan that focuses on the right metrics?
Keep reading for seven ways to enhance business performance for any type of company.
Key Points
• Effective cash flow management is essential for improving business performance.
• Offering early payment discounts can accelerate accounts receivable, enhancing cash flow.
• Automated invoicing software with digital payment options streamlines the billing process and boosts efficiency.
• Using demand-forecasting tools for strategic inventory management optimizes stock levels, reducing costs.
• Negotiating better terms from suppliers can lower expenses and improve overall performance.
Understanding Business Performance
Before you create a plan to improve business performance, get a sense of the right metrics to track for your specific company’s needs.
Key Performance Indicators (KPIs)
Establishing clear KPIs helps to make sure you’re focusing on the right targets as part of the company’s performance review. Operational indicators measure things like efficiency, budgets, and financials. Strategic KPIs include elements like impact, awareness, and profitability.
Conducting a Performance Assessment
Once you have KPIs in place, compile and record relevant existing data from the beginning. This gives you a point of reference as time goes on. Then create a timeline and tracking system.
While you may have large-scale organization goals, break those down into departmental responsibilities. For instance, the sales team must be brought into work on operating income and revenue goals, while marketing should oversee brand awareness metrics. The experts in those departments can then create the tasks to support the KPIs.
Once implementation begins, set a schedule for how frequently leadership will review progress. Then you can assess what operations are successful, which ones need additional work, and which ones appear to be subject to seasonal business cycles.
Later, presenting these performance assessments and other data about your company’s financial progress may help you persuade lenders to approve a small business loan.
7 Strategic Approaches to Improve Business Performance
Learn how to improve business performance with seven key steps.
1. Strategic Planning and Goal Setting
There are several approaches to creating a strategic plan for your company. One of the most popular methods is a SWOT analysis; the acronym stands for strengths, weaknesses, opportunities, and threats.
Evaluating each of these areas can give you a sense of what areas need improvement and what future challenges you should be prepared for. This information can help you prioritize goals, including metric-based KPIs as well as less tangible ones.
2. Financial Management and Optimization
One of the best starting points for improved business performance is a review of your current financials. Start with your operating expenses and identify any spending categories that can be reduced. Also, complete an asset inventory to see if there are any hard assets you could sell. And if you have equipment financing coming to an end, make a plan for those assets as well.
Finally, look at the price structure of your goods or services. Are they in line with the market? Can you offer more creative pricing, such as bundling or upsell strategies, to increase revenue? This is the perfect time to evaluate how you charge your customers and which direction to go with prices.
Recommended: Adjusted EBITDA: The Ultimate Financial Performance Metric
3. Operational Efficiency Enhancement
The time and effort it takes to run your business affect both sales and revenue. Enhancing your operational efficiency is a crucial part of the business improvement process.
First, look at your accounts receivable processes to determine if there are ways to expedite customer payments. This simple step can greatly improve your cash flow and might even help reduce your reliance on a business line of credit. Consider early payment discounts and automated invoice software with built-in reminders.
From there, you can review other processes, such as fulfillment and accounting.
4. Technology Integration and Digital Transformation
As you identify operational areas that could be more efficient, prioritize those that could have the most impact and consider investing in better technology. From automated marketing campaigns to better accounting software, there is often a lot of room for IT improvement.
It’s also important to integrate all of your existing tech to maximize performance. For instance, your CRM database could connect with your marketing software to avoid duplicate work in managing customer profiles.
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5. Human Resource Development
Change is happening fast, especially when it comes to AI, hiring trends, and employee development. In addition to creating a short-term strategy for HR development, consider a longer time horizon to anticipate your business needs in five to 10 years.
Identify the skills and attributes that employees will use to sustain and grow your company in the years ahead. Then you can create the upskilling and hiring programs that center on those.
6. Customer Experience Optimization
Another way to improve business performance is to maximize the customer experience. Most experts agree that it’s cheaper to retain customers than to acquire new ones. That means you’d do well to review all of your customer touchpoints, both online and in-person. Start tracking their data so you can analyze what channels are most successful and which ones have the least engagement.
Then use that information to create a customer journey map and determine what the experience is like from awareness to purchase. What pain points cause friction in moving a customer through the sales funnel? From there, you can make changes and test results to create the best user experience.
7. Marketing and Sales Alignment
Getting your marketing and sales teams on the same page can have a major impact on your business; in fact, data shows that aligning sales and marketing departments can improve sales success by almost 40%. Creating communication channels between the two departments can help to maximize lead generation and closed deals.
For instance, sales staff can educate the marketing team on common questions or pain points felt by their leads. That helps marketing refine its messaging to better target strong leads. Short, automated processes should be in place to hand off marketing leads to the sales team to maximize momentum. Bring both teams together to align in a way that makes sense for your company and goals.
Measuring Improvement Success
If you’ve created clear KPIs and a timeline for checking on progress, it should be easy to measure and track the success of your improvement efforts. But don’t give up if you don’t see progress right from the start.
Use all of the data your company gathers to adjust your strategy in each area. By continually refining, you’ll soon figure out the best ways to enhance business performance.
The Takeaway
Especially in turbulent times, businesses must look for opportunities to improve in order to stay profitable. With clear planning, greater efficiency, shrewd hiring, and useful metrics in place, you’ll be able to gather huge amounts of data that can inform every aspect of your operations. And the right data can help you increase your business performance over time.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
FAQ
What does business performance mean?
Business performance means how well a company does in a number of areas. It usually includes broad metrics like profitability and growth. Depending on the industry, business performance could also include things like customer retention or conversion rates.
How can I measure the performance of my business?
Start by identifying key performance indicators that are significant to your business. These generally include financial and operating metrics. Then analyze individual areas and departments to see where you can improve costs and efficiencies.
How often should I review my business performance metrics?
Create a routine schedule for reviewing your business performance metrics. Typically, this should be monthly, quarterly, and annually, but the departments actually working on the tasks may also consider reviewing metrics on a weekly basis.
How does employee engagement impact business performance?
Research shows that employee engagement directly correlates with better business performance. For instance, data from Gallup reveals that companies with highly engaged workforces drive higher earnings per share and recover faster from economic downturns.
What’s the impact of company culture on performance?
Company culture does impact business performance. Organizational studies have shown that companies with strong cultures increased employee engagement by 50% in three years and an 85% increase in net profit over five years.
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