5 Benefits of “Benchmarking” to Identify Areas and Means of Performance Improvement
Introduction
When asked about the core purpose of a business, different business owners will give you different answers. Many will tell you that they want to make the world a better place while others will say that they want to create jobs, but only a few courageous ones would tell you that they run a business for profit. Businesses worldwide contribute heavily to making the world a better place, but we cannot deny that the primary objective of a business is to earn a profit.
Profit is Necessary for Survival
Profit is not just important to pay the salaries and keep the business operational; it is also crucial in strengthening the company’s financial position in case of any mishaps in the future. Without profit, your business would go stale and eventually close, so it wouldn’t be wrong to say that your business’s survival depends on the profit it generates.
Businesses tend to divide their profits into different proportions. A set percentage goes to the owner while the remaining amount is reinvested in the business or deposited in the company’s reserves. To financially strengthen the business, a large bulk of the profit should be added to the company reserves. And the goal does not end at profit generation; sustainable profit growth is also very important.
Whether it’s paying salaries, buying assets or keeping the business operational, you need to generate funds. Without profit, the long-term survival of the business would become impossible. Let’s take a look at some points that can improve the profitable working in any business.
Budgeting and Forecasting
Hire financial experts to help in budgeting and forecasting for the future. Forecasting can help you prepare for future setbacks. On the other hand, budgeting can help you generate profit by managing costs and operational income. You should also divide the profit earned into different sections. In addition to adding a certain percentage to the reserves, you should also reinvest the profit in different business areas. For example, invest in initiatives to create a new product or service or to improve your products or services to satisfy your customer’s needs continuously. Alternatively, investing in initiatives that improve the customer experience; this is the art of designing and tracking customer interactions at all touchpoints to meet or exceed their demands.
Review Financial Effectiveness and Cash Flows
It is crucial to review your business’s financial effectiveness. You should set certain key performance indicators (KPIs) for your business to analyse and improve your financial situation.
You should also check for any leaks in your business’s cash flows. Sometimes a business can lose money due to several small expenses that add up to a sizeable amount. So try to find the leaks and stop them from damaging your company’s profitability.
Conclusion
No matter what anyone says, the core purpose of every private sector business is to earn a profit. No business can thrive or even survive without generating a specific amount of profit. Profit is the basis for increased company reserves, improved operational income, better cash flows, more funds for investments, and the company’s financial growth and viability.
For an impartial view of your business’s unexploited areas, contact Flourish to get your FREE Business Performance Assessment.
Profitable Working
Introduction
When asked about the core purpose of a business, different business owners will give you different answers. Many will tell you that they want to make the world a better place while others will say that they want to create jobs, but only a few courageous ones would tell you that they run a business for profit. Businesses worldwide contribute heavily to making the world a better place, but we cannot deny that the primary objective of a business is to earn a profit.
Profit is Necessary for Survival
Profit is not just important to pay the salaries and keep the business operational; it is also crucial in strengthening the company’s financial position in case of any mishaps in the future. Without profit, your business would go stale and eventually close, so it wouldn’t be wrong to say that your business’s survival depends on the profit it generates.
Businesses tend to divide their profits into different proportions. A set percentage goes to the owner while the remaining amount is reinvested in the business or deposited in the company’s reserves. To financially strengthen the business, a large bulk of the profit should be added to the company reserves. And the goal does not end at profit generation; sustainable profit growth is also very important.
Whether it’s paying salaries, buying assets or keeping the business operational, you need to generate funds. Without profit, the long-term survival of the business would become impossible. Let’s take a look at some points that can improve the profitable working in any business.
Budgeting and Forecasting
Hire financial experts to help in budgeting and forecasting for the future. Forecasting can help you prepare for future setbacks. On the other hand, budgeting can help you generate profit by managing costs and operational income. You should also divide the profit earned into different sections. In addition to adding a certain percentage to the reserves, you should also reinvest the profit in different business areas. For example, invest in initiatives to create a new product or service or to improve your products or services to satisfy your customer’s needs continuously. Alternatively, investing in initiatives that improve the customer experience; this is the art of designing and tracking customer interactions at all touchpoints to meet or exceed their demands.
Review Financial Effectiveness and Cash Flows
It is crucial to review your business’s financial effectiveness. You should set certain key performance indicators (KPIs) for your business to analyse and improve your financial situation.
You should also check for any leaks in your business’s cash flows. Sometimes a business can lose money due to several small expenses that add up to a sizeable amount. So try to find the leaks and stop them from damaging your company’s profitability.
Conclusion
No matter what anyone says, the core purpose of every private sector business is to earn a profit. No business can thrive or even survive without generating a specific amount of profit. Profit is the basis for increased company reserves, improved operational income, better cash flows, more funds for investments, and the company’s financial growth and viability.
For an impartial view of your business’s unexploited areas, contact Flourish to get your FREE Business Performance Assessment.
6-Step Plan for Improvement in Your Business
All businesses reach a point when their performance starts to decline. It can be for many different reasons, and sitting idle at a time like this, doing nothing, can be fatal for the business owners. Not reacting professionally to such a situation will destroy the entire business. Faced with a downturn in performance, the best way to improve your business is to plan and implement an improvement project.
Let’s take a look at some of the steps that you can incorporate in your business improvement project.
Analyse The Issues In The Existing System
First and foremost, you should very critically and objectively analyse the existing issues with your business. You cannot improve unless and until you know where the shortfalls lie. Once you have identified the issues you can classify them according to their importance level. The most critical issues need to be solved as a top priority. The scope of the review should not be limited to a single department or activity but should be carried out for all major aspects of the business.
Classification and Processes
Once you have analysed and classified all the major issues with your business, you should now pick out some of your most committed and efficient staff members who can join a ‘focus group’ or project team to help you out with different suggestions for the improvement process. Ideally, you should choose the most efficient and insightful staff. The focus group’s purpose would be to come up with the desired result and the direction that would lead to that result. At this stage, the entire change process should be articulated on paper and converted into action points, action owners and deadlines.
Delegate
Improvement can never be achieved without the involvement of all employees, from top to bottom. Once your managers have a proper direction, they can delegate the tasks to their subordinates. Hence individual departments or functions – e.g. marketing, finance – can improve their practices and collectively they would add a lot of value to the business enhancement.
Remove Bottlenecks
The least efficient person or technology can be considered as bottlenecks for the business. In order to carry on with your business’s improvement project, you must tackle all bottlenecks that are a hurdle in your way of success.
Never Miss Good Opportunities
Analysing existing issues and coming up with relevant solutions to internal problems is an integral part of a business improvement project, but that does not mean that you cannot improve your business from external opportunities as well. If you feel that there is a new trend or technology in the market that can help your business, that was not anticipated at the outset of the business improvement project, then you should definitely consider investing in that. Business enhancement needs to be dynamic.
Be Wary Of The Risks Involved
You will be faced with many issues and risks while you work hard to improve your business. You can only improve your business if you are willing to change some important aspects, which may be painful or difficult. Change is always resisted by organisational culture and by some (not all) employees. So before starting the improvement project, you should be wary of all the risks involved. And you should definitely have a backup (contingency plan) for each of your improvement processes.
For an impartial view of your business’s unexploited areas, contact Flourish to get your FREE Business Performance Assessment.