How to evaluate business performance
Business success requires good strategic decisions, informed by a detailed understanding of your own business performance and the wider market. Evaluating business performance doesn’t need to be overly complicated, but should be regular and include these four steps.
Review your business activity and what you set out to achieve
Your business goals should keep you focused. Set targets for your business to achieve, then conduct regular business performance reviews to ensure that you are where you want to be.
Areas to focus on include:
- Sales: have you performed as expected?
- Innovation: are new ideas developing on target?
- People: have employees and teams achieved their individual targets? Are you retaining staff or is staff turnover too high?
Efficiency and profit margins
The efficiency of your business operations is down to the best use of resources: how are you doing what you do, and are you incurring costs unnecessarily? The key to healthy profits is to reduce your outgoings as well as increasing your income.
- Operational costs: could these be reduced? Look at your utility bills, rent, staffing costs and other expenses.
- Time: are you wasting too much staff time on inefficient processes? Could you streamline your finance function so that time can be better spent on more profitable activities?
- Do your product prices or hourly rates bring in enough income? Do you need to put your prices up? Are loss leaders paying their way?
- Finance: are your sources of funding secure? Can you think of other ways to bring in money?
Research the competition
Business performance doesn’t just depend on what you do within the company. Competing businesses could seriously affect your bottom line. It’s imperative to keep up with what other businesses are doing in your field.
- How much do they pay their staff? Could you lose your best talent to a competing firm?
- What’s their pricing like?
- What is their target market?
- Are they offering anything that you don’t? And should you be doing it, too?
- Keep an eye on wider trends
- Your business doesn’t exist in a bubble. As well as your competitors, the wider world needs to be considered when evaluating business performance. That could include the local and international economy, the market you’re part of, and technological progress.
- Have prices gone up or down? The cost of raw materials could dramatically affect the profit you make on your products.
- The exchange rate: is it affecting your profits? Could you source materials from elsewhere?
- What’s the next big thing in your field? Are you keeping up with new developments, or are customers likely to look elsewhere for what they need?
The right accounting software can help
A proper evaluation of your business can only take place if you have the means to access all the facts and figures with the tools to analyse them. With award-winning financial management software like AccountsIQ you can access instant, customised reports on all areas of business performance and you can gain incredible efficiencies from our financial consolidation software and the software AccountsIQ is integrated with, such as OCR technology to read data from supplier invoices, (Lightyear, Kefron AP, AutoEntry and iCompleat to name a few), payroll software such as BrightPay and our integration with Salesforce CRM.
AccountsIQ is suitable for both small, fast-growing and medium-sized businesses and it is an affordable accounting solution that can scale with your business, as StitcherAds discovered:
AccountsIQ is a high standard of product at the right budget for a medium-sized company. As a smaller business it’s tempting to go with a simpler solution such as QuickBooks or Xero, but these platforms don’t scale as well as AccountsIQ. With excellent tools for consolidation and custom reporting, AccountsIQ offers a more robust accounting solution that can quickly adapt to the changing needs of a fast growing business like ours, while still remaining very affordable.” Fiona McKenna, Interim CFO, StitcherAds. Read StitcherAds Case Study.
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