The Yeager Sherburne 4-step wealth creation program starts with evaluating ways to reduce costs. The second step is reviewing operations to improve your business performance.
This second prong of the approach is a very important one. That’s because it evaluates three crucial areas of your business to better understand the following.
- Staffing and who does what to look for overlap of duties
- How the business delivers its services
- Ways the business creates revenue
Our goal in assessing these three areas is to increase operational performance which in turn improves your finances.
With this in mind, we’ll explain in more detail some of the things we’re looking for when creating business performance improvement plans.
What is performance measurement in business?
Specifically, business performance is focused on measuring important metrics and tracking progress against those metrics. These metrics are not strictly financial and should include operations goals.
Business goals and the metrics you track might include any of the following.
- Generating new leads
- Improving sales numbers
- Increasing profit margins
- Building efficiency in the production process
- Earning a larger share of the market
- Decreasing customer service complaints
- Reducing staff turnover rates
Firstly, you need a baseline on all of these items to know what your metrics mean. You have to measure your existing benchmarks in these areas to understand your improvements.
Ways to improve business performance
While your financial statements tell one part of your business’s story, your operations speak to another. Looking at a profit and loss statement we might not see areas of opportunity in staffing expenses or inefficient shipping procedures. At a glance, these items look like fixed costs.
But once we dig deeper into your operations, we can see these areas of opportunity. Here are some of the ways we measure business performance to guide business owners in making improvements.
- Make sure the right people are in the right roles. Overlapping job roles create inefficiencies. By moving responsibilities, we can help work with people’s strengths and avoid duplication of efforts.
- Incentivize employees with performance plans and bonuses. Some employees need benchmarks and goals to help them reach their full potential. We look for those opportunities in your staffing as well.
- Reviewing supply costs and services expenses. Every business has to seek out materials and services from other businesses. Paying too much or accepting poor performance from a partner does not help you run a lean, high-performing business.
- Efficiencies in goods or services delivery. For example, a software-as-a-service company might be able to make the purchasing process more transactional to reduce friction between getting the product to the customer. This speeds up the purchasing process and reduces staff time in completing the transaction.
- Eliminating unprofitable products or services. If a product or service isn’t bringing in revenue, we’ll look for ways to improve that. But sometimes, we need to remove products and services to eliminate high expenses and low profit margins.
This is just a glimpse into some of the many areas of your business we’ll review. Each business operation is unique and will have different areas of opportunity.
We offer a free worksheet to help you evaluate your profitability and find money opportunities in your business. Download it now
How to measure business process performance
Lastly, measuring business process performance means setting goals for what you want to be, creating key performance indicators and measuring progress toward a goal.
The 4-step wealth creation program has been highly successful for many small businesses. For this reason, offer a worksheet to help you implement this process in your business.
Have questions about how to improve your business performance? Schedule a free assessment and consultative call with John Yeager, CPA. He’ll answer your questions and guide you in using the worksheet to improve your business.