5 Easy Ways to Accurately Measure Business Performance
An easy way to measure business performance might be to compare the performance of your company with competitors. This comparison, of course, uses trusted business media as a reference source which will usually provide a ranking based on the company's achievements in a certain period of time. However, of course this measurement has the subjectivity of the media itself.
For that, you need to understand how to measure business performance based on certain criteria as follows:
Calculate the amount of return on investmentYou can get company investment from the profits that the company has collected . In this case, the excess income or profit after tax is the return on your investment. This calculation can be done by calculating the value of the company's equity or in accounting terms it is called the Return on Equity (ROE) .
For example, suppose your company received an injection of $ 50,000 by an investor. Meanwhile, last year's profit after tax was IDR 15,000,000. So, the value of the company's equity obtained last year can be calculated with the formula:
ROE = Profit after tax ÷ Equity
= $ 15,000 ÷ $ 50,000
So, your company generates a return of 3% on the investor's investment.
Pay attention to investment risksTo measure business performance, investment risk is one of the levels of uncertainty in the company's future profits. Of course, this profitability depends on the company's own revenues and expenses. Generally, investors will provide funds to companies that have the potential to provide them with relatively high returns. Therefore, you must carefully calculate the amount of return on the investment they will get.
Pay attention to cash flowPoor business performance can be identified based on improper budgeting and financial management. Make sure you regularly evaluate the company's financial activities through cash flow that contains information about expenses and income earned by your business. Cash management must always be updated and monitored so that business operations can be properly controlled.
For investors, cash flows in financial statements are the numbers that must be considered . The reason is, this document will provide an overview of how financial management and work systems in your company are run. In fact, through this financial report, investors can speculate on what will happen in the future, whether it will gain or lose.
Consider website trafficIn this digital era, companies will look more professional if they have a website . In addition to helping you reach a larger number of consumers, your presence online can attract investors to inject funds into your company.
Don't hesitate to take advantage of analytics software from Google to measure visitor traffic to your business website and get an in-depth analysis of what consumers really want when they visit the site. Besides being able to know the amount of traffic, you can also measure the conversion rate and adjust it according to company needs to drive better business performance.
Know customer satisfactionAs a good businessperson, you need to know clearly how consumers' feedback on the products or services they use in your company. For that, you need to ask for testimonials from consumers after purchasing. Either through the testimonial column on the company website or social media, consumers will appreciate the services provided so that companies can evaluate business performance.
The more consumers who write positive comments, the better your business performance will be. Conversely, if there is negative feedback from consumers, then you need to submit an apology and service improvements for the sake of customer satisfaction . This automatic customer complaint service can also provide an overview of your company's image in the eyes of investors.
Via the Business DashboardThe use of certain tools can also help you measure business performance accurately. You can generally find business dashboards in various accounting software , one of which is Sleekr Accounting. This one feature makes it very easy for you to monitor the financial condition of your business in real-time.
If you use Sleekr Accounting , you will get views in the form of charts, diagrams, and lists. Some of the financial performance that can be seen are sales, purchases, profit / loss, cash flow, and inventory. Because it is real-time based , you can quickly make decisions based on the reports that appear.
Running a business in this modern and sophisticated era, of course, presents its own challenges for you. However, by using Sleekr Accounting software , all your business matters can be fulfilled more effectively and efficiently. You can manage and monitor cash flow payments anywhere and anytime in real-time. This software you can get without initial investment and minimum contracts.