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How to Measure Business Performance

Posted May 3, 2012 by

How do you measure business performance? Seems like a simple enough question, right?

Yet you may be shocked to learn how many small business owners aren’t tracking critical numbers. (Or maybe you won’t be shocked? Maybe you’re one of them?)

In this brief video I’ll present some of the best yardsticks for gauging your business performance.

Action Steps:

  1. Watch this video and ask yourself: Do I regularly review numbers to track my business performance? Here are the three most critical numbers to get a firm grasp on your bottom line:
    • Count the cash on hand
    • Figure your monthly net profit
    • Calculate your salary
  2. Determine what two other Most Valuable Indicators (MVIs) you want to track to measure your business performance.
  3. On this page, please share the two MVIs you created. Also, feel free to ask any questions on this page.

Principles:

  1. Most Valuable Indicators, or MVIs, are the five numbers small businesses should track on at least a monthly basis.
  2. Cash on hand is the lifeblood of your company. Cash really is king.
  3. Net profit numbers are most useful when compared to the prior year’s performance.
  4. Your business should pay you well. You are the Most Valuable Employee you have.


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  • Norman

    Employee moral  Track have a 5 to 10 min. talk with them at least once a month.
    we are a small company and so this is not to hard.
    Sales set a goal per month based on overhead and profit margin.

    • http://www.DaveCrenshaw.com Dave Crenshaw

      Thanks for sharing these, Norman. Just a thought: perhaps there’s a more accurate measure of employee morale? One suggestion to stir your thinking is polling the employees during that brief meeting and asking on a scale of 0 to 10 how satisfied they are.

  • octonerd

    For my online business I track views/pageviews and subscribers.

    • http://www.DaveCrenshaw.com Dave Crenshaw

      Great. Thanks for sharing!

  • Mohsin Amarjee

    1. MVI – Number of products and services added in this year as compare to previous year.
    2. MVI – Growth of employees, in terms of job position, experience, knowledge, etc.

    • http://DaveCrenshaw.com/ Dave Crenshaw

      Great. Moshin. #2 will be a bit tricky to measure, so I’d suggest using a subjective scale such as 0 through 10 as to their current progress level.

  • http://www.facebook.com/manish.dabkara Manish Dabkara

    I check –
    1. Culture of my organization
    2. Sustainability of Organization

    • http://DaveCrenshaw.com/ Dave Crenshaw

      Thanks, Manish. These are good indicators, but how do you track them? You’ll likely need to create an arbitrary scale such as 0 to 10 as these are more conceptual than numerical.

  • http://www.facebook.com/manish.dabkara Manish Dabkara

    hi Dave………..whats new

 

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