It’s easy for owners of SMEs to get bogged down on the micro, day-to-day operations of their business. This is particularly relevant in ever changing business environments, as industries, staff, service and product lines grow and contract – business owners can lose sight of greater business goals and aspirations.
Regular Business Performance Reporting (BPR), using specific, tailored Key Performance Indicators (KPIs) and targets, can provide business owners and managers with greater insights and allow them to better understand the performance of the business, and present opportunities to assist in reaching their goals.
How BPR Works
BPR starts with the implementation of systems and processes to enable the efficient gathering of information. If these systems are not in place, the quality of the information will be poor, and the resultant reports will be inaccurate and lack meaning and relevance to the users. Before implementing any BPR, we recommend that you use a cloud based software (see our previous article on cloud based software), and have timely procedures around data entry and record keeping for your accounting software e.g., sending/receiving invoices, bank reconciliations etc.
Key Performance Indicators (KPIs)
KPIs are one of the most common measurements of performance in a business – they measure key components of your business to provide greater clarity on whether you are achieving your desired results. By having an understanding of these, you are in a position to make better, more informed decisions and act on potential opportunities or problems within the business.
KPIs can be implemented over several areas within a business, and can be user specific e.g., from business owner to key staff member/s.
A target is the result or business objective you are trying to achieve – it is important to create a targets for each KPI in order to measure and monitor the businesses performance.
Benchmarking can be used in these reports as a way to set targets for your business. Benchmarking is the process of comparing your business performance with other businesses in the same or similar industry. Using benchmarks to set targets within your BPR is a useful process as it can illustrate where your business performance is above or below your competitors, and where your business can improve its performance.
Evolving your BPR
BPR is not a ‘set and forget’ process. Businesses and industries are ever changing and evolving, so your business KPIs and targets must also move with the times. It’s important to review your KPIs and targets at least annually to ensure the KPIs and targets are still relevant and meaningful, and also add any new KPIs or targets that may have become more relevant throughout the period.
A BPR should be:
Your ability to reach your goals is dependent on your ability to understand, interpret, and act on the results of your business performance on a regular basis. Acting quickly on opportunities, and dealing with small problems before they become big problems will assist you to build a successful, profitable business.
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.