Business Growth Planning and Key Results Areas (Part I)

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.

When business owners do understand them, it enables the broad-brush items to become Key Results Areas (KRAs). Getting appropriate KRAs clear enables owners, managers and team leaders to focus on what they need to manage effectively. In one of our earlier blog articles, we stressed the importance of the Five Questions of Performance:

  • What is expected of me?
  • Why is it expected?
  • Can I do what is expected?
  • How am I getting on with doing it?
  • What’s the reward for doing it well?

Linking KRA’s to those questions really helps everyone to drill down to the detail. In many cases, that is where outside expertise delivers its greatest benefits. Business owners and managers have a great deal to do working on the broad-brush items. It is essential that they can choose the most appropriate KRAs to help them get real clarity, to plan ahead, and to monitor and manage what they and their teams are actually doing so the growth is maximized.

In the next article in this series we will discuss some operational KRAs, and how to measure them. Business owners want to know what is working well, so those things can continue, and what needs tweaking so it can be improved. In the third article, we will discuss financial KRA’s to enable the business owner to drill down into financial details, so everything stays on track.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more valuable articles to help you successfully manage the challenges of growing your business profitably, please search our blog at our website www.portalcfo.com.

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