How to measure your business' performance

When your business is performing well, it's all too easy to ignore the underlying issues that can create difficulties in the months or years to come. When markets change or an unforeseen event arises, businesses which haven't looked at their key performance indicators (KPIs) are often left cruelly exposed. Carrying out a regular healthcheck helps you protect your business against any lurking nasty surprises. In this guide we'll look at:

  • Financial problems
  • Staff
  • Customers
  • Markets
  • Overheads

Financial problems

For finance problems, read cashflow. Cashflow is the number one business killer. Most businesses have a gap of weeks, if not months, between the raising of an invoice and the customer paying, causing a cashflow black hole - particularly if a major order requires investment in new staff or equipment. Look closely at your invoice/credit control processes, and look at ways of incentivising customers to pay on time. Remember, if this isn't a problem now, it might be if your customers start to struggle. Offer better rates for prompt payment and come down heavy on or drop late payers - losing their business, no matter how unpalatable, is better than losing yours. Look into factoring and invoice discounting. Look to hoard cash, you might need it when you least expect it.

  • Look at your invoice/credit processes
  • Incentivise customers to pay on time
  • Get tough on late payers


In the current climate where on the fittest survive, your people are more important than they've ever been. In the scramble for market share, your people need to be brand ambassadors so you need to ensure they're trained, capable and motivated. Monitor staff churn, carry out regular reviews, invest in training, make people feel valued, reward good performance. Conversley, beware of becoming too dependent on key members of staff - they might leave. Counter this by securing them on lengthy notice periods.

  • Value your staff
  • Invest in your brand ambassadors
  • Lower risk of losing key staff by offering long notice periods


Never stop talking to your customers. Know they're happy with your service, know if they're unhappy. Pay special attention to major clients. Carry out market research and satisfaction surveys. Talk to suppliers to ensure you are not only getting the best deal for your customers your supply lines are secure. And keep your client base wide - you don't want to be in a position where losing one contract could seriously damage you.

  • Actively seek feedback
  • Protect key clients
  • Reduce risk by broadening customer base

The market

Economic instability mean markets can change overnight. Consequently, make sure you're not investing too heavily too far ahead in one market and build as much flexibility into your model and budgets as possible. Plan to survive as well as prosper. And keep your eye open for opportunities as less careful rivals flounder.


Fairly obvious in such hazardous times, but make an assessment of overheads a frequent process. Make sure you're working at capacity in terms of staff, office or factory space and review all arms of the business. If something isn't contributing as much as another element, make a firm judgement call on whether it ever will. Look after the core business. Be ruthless to protect that and the people you employ, if it means losing some of them to benefit the rest.

  • Constantly review costs
  • Work at capacity
  • Be ruthless to protect the core business

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