What are the advantages of reviewing business progress and target-setting?

Measuring your business performance and setting targets are important processes for helping your business to grow. Many small businesses can run themselves quite comfortably without much formal measurement or target-setting, but growing businesses still need to have a handle on these processes.

It can greatly benefit your business if you think about long-term proposals and strategically plan for them. This is particularly important if you want to expand your business by taking on more staff, creating departments within the business, or appointing managers or directors.

Benefits of business reviews

Strategic business reviews are useful if you:

  • are uncertain about how well your business is performing
  • want to know how to get the most out of your business or market opportunities
  • have a business plan that is out of date and you haven’t updated it since you started the business. You did it, but is it still relevant?
  • see the business moving in a direction different than the one you had planned or envisioned
  • feel the business is becoming difficult or unresponsive to market demands

What are the benefits of performance measurement?

Knowing how the different areas of your business are performing can help you to assess where your business is strong, where it is weaker, and factors you can change for the better. This should help you to manage your performance proactively and efficiently.

However, you need to make sure that you measure the correct areas of your business so you get the right information. You should focus on specific factors that are easy to measure and show the areas where your business is successful when compared to the rest of the market. These are known as key performance indicators (KPIs). See deciding which key performance indicators to measure.

You should measure non-financial targets as well as considering financial targets. Some other areas you may consider are:

  • your customers or clients – how many you have, how often they buy from you and how many have you lost or gained
  • customer service – waiting times for assistance, complaints, or reasons customers or clients have complained
  • market share – whether your share of the market increased or decreased against competitors
  • your staff – satisfaction levels, work quality, or attendance records

What are the benefits of target setting?

Once you have identified your KPIs and found the best way to measure them, you must start to set performance targets. This will give everyone in your business an idea of the targets they need to aim for, individually and collectively.

Your strategic visions can sometimes be hard to communicate, but you can break your main goals down into smaller targets to make it easier to manage. Your smaller targets become more like day-to-day operations which, once completed, move you closer to your final goal.

Setting the business direction

By creating a clear business strategy, you will be able to answer any concerns and have an idea of how to move forward and hit your targets.

Consider asking yourself these questions:

  • What is my direction? Look at where you are now, where you want to go over the next three to five years and how you intend to get there.
  • What are my target markets now and in the future? Which markets do we or will we compete in, how will they change and what does the business need in order, to be involved in these sectors?
  • How do I gain market advantage? How can the business perform better than the competition in the chosen markets?
  • What resources are required to succeed? What skills, assets, finance, relationships, technical competence, and facilities do I need to compete? Have these changed since I started?
  • What business environment am I competing in? What external factors may affect the business’ ability to compete?
  • How am I measuring success? Remember, measures of performance may change as your business matures.

It is doubtful that you will be able to answer all of these questions on your own. By involving your professional advisers, your fellow directors, and your senior staff will all help to make your review more effective.