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    How to Assess Your Business Performance From the Ground Up

    Guest Post
    Business PlanningCompany CultureOperations

    By Alleli Aspili

    Business performance evaluations are important at any stage of a business; they're a way to assess the company’s current state. Business assessments should be done periodically and should be included in your business planning cycle. A well-thought-out assessment will not only help you know the current state of your business, but will also help you determine the direction you want your business to take. And while assessments are considered mandatory for high-level organizations, they should also be implemented in small and mid-size businesses.

    The key here is to make sure you assess your business from the ground up. A good business assessment needs to address where you are today, what your short- and long-term goals are, and what you need to do to ensure you get from where you are now to the goals you have set in place. Business assessment tools can help you clarify these points with both clarity and direction.

    There are at least six important areas you need to examine when you do your business performance assessment: processes, organization, technology, financials, competition, and clients. Ask yourself questions concerning each vantage point, examine the business practices you currently have, and then answer the questions honestly and completely.

    6 areas to examine in your business performance assessment

    1. Processes

    Identify processes that are crucial to the effectiveness and efficiency of your business. There are six core processes that can and should be used to enhance your business:

    • Your business intake process (How do you generate leads? Where do you look, find, and get leads? What is your process in lead generation?)
    • Your business financial planning process
    • Your business risk-management process
    • Your business investment planning and management process
    • Your business client service process
    • Your business client planning and review process

    Assess your current situation and define areas of improvement so you can work on building strategies, implementing new processes, or refining current ones.

    2. Organization

    This particular point is based on the roles and responsibilities of each leader and team player in the organization. You will need to assess three things: yourself, your employees, and your management team.

    Assessing yourself: Your business is a direct reflection of who you are. Examine both your negative and positive qualities so you can determine your impact as a leader and manager.

    • What are your strengths and weaknesses?
    • How can you improve your skills to better manage your business?

    Assessing your employees: Employees are a crucial aspect of your business.  who will maintain the vitality of your business lifeline.

    • Do you employ the "right employees," ones who contribute to making your business run smoothly, or are you forced to rely on a small percentage of key employees to get the job done?
    • Does your business suffer from a high employee-turnover rate?
    • Do you feel the pinch when a few employees are absent from work?
    • Do your employees know what is expected of them?
    • Do you know employees' strengths and weaknesses? List abilities such as business acumen, business-development capabilities, product and services knowledge, technology and presentation skills, time-management skills, business-tracking capabilities, and business-planning skills.

    Assessing your management team: An ideal management team is one that has members with diverse skills that complement each other, and works well as a unit to help achieve your vision for your business. Analyze the value your management team brings to your business by asking:

    • What does each member bring to your team?
    • Do their strengths and weaknesses create a strong balance?
    • What training can you offer them (internal or external) to complement their skills?

    More articles from AllBusiness.com:

    • Year in Review: How Close Did You Come to Meeting Your Business Goals?
    • Weekly Team Meetings: An Important Step to Retail Success
    • What Every Manufacturer Needs: A Market Assessment
    • Closing the Gap Between a Self-Review and a Supervisor’s Review

    3. Technology

    Small and mid-size businesses often shy away from investing too much in technology, especially when one operates the business single-handedly. However, when analyzing business performance, you should assess the need to streamline and integrate business processes (see "Processes") to determine how technology can help things work easier, faster, and better.

    Basic requirements are:

    • A customer relationship management (CRM) tool
    • A financial planning tool
    • An investment planning and management tool
    • Office software such as Word, Excel, and PowerPoint
    • Specialized tools where appropriate, like an inventory manager
    • Information-based tools

    4. Financials

    It is crucial that you know how to effectively manage your finances. This includes keeping financial records up-to-date and plotting future cash flow. Managing your finances will allow you to know where your business currently is and where it is going. Ask yourself:

    • Do you consistently forecast upcoming sales, cash flow, and profits?
    • Are your forecasts reasonable and accurate?
    • Have you noticed a decline in sales this year compared to previous years? Can you identify the reasons for the sales decline?
    • Have financial difficulties caused you to get behind on payments for supplies or ? Get turned down for financial assistance from the bank?
    • Are overhead costs outrunning your profits?

    You also need to maintain a working budget and be sure it includes an area that's often overlooked: client marketing expenses and business marketing expenses, whether for collateral material, education, consulting services, etc.

    5. Competition

    Every business will always have competitors. A working knowledge of your competition will help you determine where you can make business improvements.

    • Do you know who your competitors are, and what their strengths are?
    • Do you use benchmarking tools to see how you measure up to your competition?
    • How would your customers compare you with your competitors?

    6. Your clients or market

    When assessing business performance, don’t forget to consider your clients. They are the reasons why you have a business in the first place. A viable market means a profitable business for you. Determine the following:

    • What are the demographics of your market—who are your customers?
    • What portions of your customer base are most and least profitable?
    • Do you anticipate entering new markets?
    • What acquisition methods work/have worked for you? If a method worked before, keep doing it.
    • How well do you know or not know a client? How can you leverage/improve relationships?

    Assess business performance regularly

    Conducting regular business performance assessments in these six focus areas will ensure you stay on track towards your goals. Aside from the act of doing periodic assessments, what's more important is establishing action metrics that will enable you to act on the results of your assessments and help push your business forward to success.

    RELATED: Do You Know What Your Competitors Are Doing? Create a Competitor Analysis in 5 Easy Steps

    About the Author

    Post by: Alleli Aspili

    Alleli Aspili is a Senior Specialist for Business Development for Infinit Outsourcing, Inc. (Infinit-O), an ISO-certified BPO company that caters inbound call center, finance and accounting and health-care outsourcing to SMEs. Alleli is responsible for maintaining Infinit-O, Infinit Contact, Infinit Healthcare, Infinit Datum, and Infinit Accounting online brand and content.

    Company: Infinit-O

    Website: www.infinit-o.com

    Connect with me on Twitter and LinkedIn.

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