How do you keep the pulse of your business? You must be monitoring business performance to successfully achieve your business goal. But too many small business owners think this means just reviewing their financial reports when it strikes them. We know how well most owners do their financial accounting.
So, what is the right type of monitoring? And, how frequently should you be doing it?
Every business needs two kinds of monitoring – performance and financial. The frequency of this reporting is dependent on the type and size of your business. Our recommendation is at a minimum performance reporting weekly, and financial reporting at least monthly.
How to streamline monitoring business performance
In order to monitor performance of anything, you must first set an expected level of effort. You notice I said EFFORT. Where in your financial reporting do you see level of EFFORT? Nowhere! Which is why most small businesses fall short with their performance.
This is why we push Tuning Your Revenue Engine (TYRE) so heavily. It is a method used to help you determine your level of effort for every aspect of your business based on your revenue target! It helps you set the expectation. Now it’s easy to hold short, meaningful, and structured meetings.
By structuring and focusing your meetings, you can spend less time in meetings and more time working on growing your business. Most regular meetings go too long because they’re used to discuss and fix specific problems. You should schedule specific meetings to discuss problems. Keep performance meetings focused on a specified agenda of monitoring business performance and don’t deviate. This keeps these meeting short and highly productive.
How you should be monitoring business performance
Regular Performance Monitoring
To start, you should be meeting weekly to monitor progress on your business plan. Remember the Business Growth Simplified approach to business planning is 2-3 pages and a 1-page budget. From here you work a 90-Day Action Plan that contains your day-to-day tasks.
You should review action plan progress in your weekly meeting. By doing so, you hold everyone accountable to achieving the objectives that move you closer to your vision by achieve your annual business goal and hitting your revenue target.
Regular Functional Meetings
What do we mean by functional meetings? These are the business functions or departments of your revenue engine. In these meetings your managers should be discussing the activities happening on the frontline to achieve the functional objectives set in your high impact business plan.
For example, your production manager should be reviewing how much work was complete during the week vs. how much was scheduled vs. how much is required to hit your revenue target. Sales should be discussing how many deals were closed to hit the goal and if enough proposals/quotes were written to keep the revenue engine firing. Marketing should review how many leads were generated from the week’s campaigns to assure they’re supporting the sales effort.
By monitoring business performance like this, you can adjust your level-of-effort week to week and influence the end outcome of your monthly financials. You influence the outcome of your business by tuning your revenue engine!
Monthly Owner Review
The monthly owner’s review keeps managers accountable to achieving the goal and objectives of the business plan. The financial review is your starting point for this meeting. Your financial reports show the outcomes of the activity for the month. That is, your financials show the financial results of the work you completed in the previous month.
If your results deviate significantly from what you expected, then as the owner, you want to know what your managers are doing to correct the negative deviations, and further accelerate positive deviations. Monitoring business performance in this way is so important. Your effort is what creates your financial results! But most business owners don’t understand how to monitor their level-of-effort and miss out on the opportunity to better control their financial outcome.
Are You Monitoring Business Performance Correctly?
Your answer this question is either yes or no. If your answer is yes, great! You should post to the comments below to give others a sense of how you do it.
If your answer is no, contact us about getting our agenda templates for each of these meeting types. Or, we are happy to consult with you to help you determine your level-of-effort across your business and setup your reporting. It doesn’t take long to figure it out. You just need to get started and soon you’ll be on this proactive path to improving the profitability of your business.