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Business Metrics – Business Performance & Intelligence

Why you should take the time to measure performance

As a small business owner, you can’t underestimate the importance of tracking the progress of your business.  It’s very easy in the rush of hard work to forget to take time out for planning.  In the long run you’ll be more profitable and your business will run more smoothly if you take a couple of hours each month to assess how well you’re going and decide what you need to do next to stay on track.

In fact if you want to grow steadily over a period of time, then you need to have in place well developed methods of tracking your business goals in relation to growth, income, expenses, etc.

By building a framework of business metrics – that is, measurable activities and achievements, or more commonly referred to as KPI’s (Key Performance Indicators) – they will point you forward and move you forward.

Why plan ahead?

Developing business metrics and measuring results against them will offer your business several benefits.

For one thing, they will help outline a clear business path for your business.  In every business, circumstances change, and it’s tempting to react impulsively or emotionally.  With the numbers in black and white, you can make a more rational decision on how to proceed.  Monitoring and acting appropriately to changes in business metrics hold the key to the consistent growth and success of your business.

You can generate reports on plenty of KPI’s yourself.  You should already be keeping tract of sales and expenses each month, but growing businesses should also consider other important metrics.  Are your customers spending more than they were a year ago?  Are you getting business from your chosen target sectors?  If you’re tendering for work, what percentage of tenders are successful?  Are your profit margins increasing or decreasing? 

Create an analytical framework

Your framework starts with establishing business goals.  These goals may include sales targets, ideal profit margins, or success at signing up new customers.  One useful thing is to go through a budgeting exercise for your business.  This exercise forces you to answer questions such as:

• How much can my business realistically grow based on current conditions?
• What aspects of my business have the most impact on my bottom line?
• What are the pain points that affect the bottom line?
• Where are the growth opportunities?
• How can I reduce the cost of acquiring new customers?
• Where can I cut costs?

A SWOT (Strength, Weaknesses, Opportunities and Threats) analysis will also help you honestly assess your business compared to its competitors.  This exercise can form the basis for setting measurable, actionable, results-orientated goals.

Break down the goals into measurable metrics

A second step in developing your business metrics involves breaking down your goals into action items that can be easily tracked. Although an obvious step, this is where most businesses falter. Even companies which set goals can forget to carry through the process with effective monitoring. You’ll need to come up with the metrics that match your goals and show the way forward.

Return on investment

Although all this may sound a little overwhelming at first, the benefits will significantly outweigh the time you invest. You may also be fearful of finding out shortcomings in your company, but be assured that it’s far better to know and act on problems than to brush them under the carpet. In the long run, effective planning will make your day-to-day work easier as you establish clear rules for many aspects of running your business such as controlling your cashflow. You’ll actually have to make fewer hard decisions, not more; and you’ll make them without the confusion of information overload. Effective goal tracking is the difference between a responsive organisation and one which is shooting in the dark.

What next?

Put aside a couple of hours, and examine your business plan.  If you wrote one when you first started your business, you might be surprised how much things have changed.  It’s time to plan for the future again, so add these to your to do list:

• Establish some goals.  You might want more customers, perhaps you need to reduce costs, or you may need to take on staff to sort out delivery problems.  It might even be as simple as a plan to change suppliers.

• Decide what metrics you need to assess whether you’re on track to achieve your goals.  Where is the information going to come from, and how will you get it?  What benchmarks will flag up success or problems?

• How often will you come back and look at your progress?  For many smaller businesses, once a month is enough.  Plan to take time out at suitable intervals – and then stick to it.

Need some help getting started?

Setting up Business Metrics for clients, which are specific to their business, and meeting with clients on a monthly basis to go through the business metrics and make sure they are on track, is something that we do for many of our clients.

If you would like us to assist you in establishing your business metrics and monitoring them over the short term, or long term, then call my office on 9317 7300 to arrange a complimentary, no-obligation, consultation to learn more about how business metrics can improve your business performance.


Paul Baggetta


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Paul Baggetta is the Founder & Principal of Baggetta & Co (ABN 68 786 233 813).

Paul Baggetta has been a Taxation Accountant since 1981, a Financial Planner since 1998, and in 1993 qualified as a Real Estate Licensee, holding a Triennial Certificate (currently not trading) and operated his own Real Estate business for property investment clients for over 5 years as a second business.

Financial planning services are provided by Paul Baggetta as an Authorised Representative (No. 261469) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. Australian Financial Services License No. 223135.


Taxation & Accounting services are provided by Paul Baggetta as a Registered Tax Agent (No.61487008) and is a Member of SMSF Association, FIPA & NTAA.