Key Results Areas (Part III) and Key Performance Indicators

key results areas key performance indicators

You know your goals, you measure sales, production efficiency, delivery accuracy, and overall customer satisfaction rates. You learn from the financial reports that the accounting department give you. You use all these to help you plan your future growth. As you grow, you continue to focus on broad-brush items, as well as the specific Key Results Areas and the Key Performance Indicators (KPIs) within them. The Key Performance Indicators give you the detailed information you use to keep your plans on track.

Many CEOs’ backgrounds are more practical than financial. They have a background in the products their company makes, the services it provides or industry in which it operates. Few small and medium-size businesses have a CEO who is, primarily, an accountant. The finance numbers are just as important as the others – especially when meeting with the bank. It is just as important to know the financials as it is the production, delivery and support parts of the overall picture. In this third article on business growth planning, we will look at six simple financial KPIs that will also support your growth.

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Key Results Areas (Part II) and Customer Satisfaction

key results areas customer satisfaction

In the first article in the series we introduced the idea of Key Results Areas. In this second article, we will discuss how to use them to help with business growth. We will use “customer satisfaction” as our area of interest. Satisfied customers are, of course, a prerequisite for successful growth. Effective business growth demands, for example, that:

  • Existing customers and clients continue to buy.
  • They want to buy more, whether more of the same or of new products and services.
  • New customers and clients begin to, and continue to, buy.
  • Returns and cancellations are minimized.

All of these areas come under the broad-brush category we call “customer satisfaction.” Within these areas businesses can find measurable results that reflect performance within those Key Results Areas (KRAs). Those results provide information the business can use both to measure the success of current growth and the likely success of future planned growth.

In this article we will discuss some valid ways to see those results. We call them Key Performance Indicators (KPIs). The KPIs we will look at are, obviously, samples. They may or may not be directly valid for every business, but they will help to explore the idea, for your own business growth planning.

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Business Growth Planning and Key Results Areas (Part I)

key results areas

In this series of three articles, we will discuss some Key Results Areas as they apply to business growth planning.

Some Background

Effective business growth planning relies on several critical factors. Many business owners and managers see the broad-brush items clearly. They set sales targets; production and delivery targets; they monitor cash flow; and they study the numbers that come out of the general ledger. Department managers and team leaders work together to solve existing, practical problems, and to decide how potential future problems can be avoided. Where needed, the owner also discusses finances with the bank.

Truth Lies in the Numbers

Every banker believes that all truth lies in the bank balance, and every business owner knows that there is more to it than that. The truth in the bank balance is a result of what lies in the general ledger, and that comes from what the sales ledger, purchase ledger, inventory and payroll costs communicate. Add to those, how much the business is due to pay to its creditors and for how long those payments have been due, plus how much is owed to the business by its customers and clients, and how long they have been due. When a business works on growth, truth can be a many-faceted object. The business owner must understand those facets.

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Business Growth Planning Starts with Effective Business Strategy

As any successful business owner can tell you, business growth starts with a plan. Businesses can grow by accident, but the likelihood is small. However, any old plan will not necessarily produce the desired growth results. You must start with a strong strategy.

Strategies are most effective when they have two things: a goal of where the business wants to go and an awareness of a business’s strengths and weaknesses. In essence, you have where you want to go and where you are; the strategy is the GPS.

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3 Things to Remember While Your Business Is Growing

As a business owner, you are happy when your business starts to expand. However, there are some challenges that accompany a growing business. Here are a few things you’ll want to remember during the transition so your business can successfully grow.

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