Businesses that measure what they do are often more successful than businesses in the same industry that don’t. Some businesses take measurements to a higher level by using key performance indicators to determine what improves profits and cash.
Some business owners tell us having key performance indicators and understanding how they work in improving profits makes their life significantly better. Oftentimes, these owners tell us their mantra for key performance measurements is… “What gets measured gets done”. If a business owner understands what the drivers are for the important aspects of their business, they will understand where to put their efforts in running their business.
After business owners have identified the drivers of their business and put measurement systems in place, they will have increased the value of their business in two ways. First, their business becomes more profitable which automatically makes it more valuable. Second, measuring what drives a business helps you systemize the business in a manner that others can understand. This may be more subtle, but is just as valuable. The systemization of your business allows others to run it if you are unable, or if you have moved on to other things in your life.
Some of the processes we often talk about that concern key performance indicators are:
• Understanding your profit and loss statement, balance sheet and cash flow statement.
• Identifying the drivers that make your business successful.
• Creating drivers and Midas Strategies that can make your business more successful.
• Developing compensation strategies that focus on results, not effort.
• Assisting you in finding the appropriate help in implementing key performance indicators.
• Understanding how key performance areas and key focus areas integrate with each other.
Our goal when working with our Clients is to help them make their lives better. If developing strategies to increase long-term value in your company is important, considering implementing key performance indicators in your company might be an activity that helps.