‘UNBELIEVABLE’ would be the correct word when whenever we begin to define the speed of doing business nowadays. Once when money was the only measure to optimize the business, things are different now. Nowadays, multiple Business Performance metrics are required for taking the expert assessment of the business.
But if you are one step too late for your metrics to track, then you may feel lagging and need to make some corrections on your part. Because leveraging metrics business is quite essential to stay ahead of the competition. Because at the end of the day, profit remains the most prominent thing to keep business going.
And in terms of improving the profits of your company [of business], there are three ways that you should keep in mind!
All the given methods above require persistent measuring and tracking of operational performance [as it’s one of the key performance indicators]! And you simply can not track or go through such indicators without overviewing any business metric! So let’s understand what exactly it is!
What Are Business Performance Metrics?
Business metrics are just quantifiable indicators that are highly useful for business performance. Based on which one can be used to track performance levels of the business. But the thing is there are so many different kinds of businesses, which is a quite tough task to track. Even the number of business processes is way too much, hence there are hundreds of such business performance metrics.
By assessing the metrics to track the business, one can easily measure the percentage of growth, whether it’s short-term or long-term. This metric would exponentially help to improve businesses by measuring their progress if they continue to monitor the following:
Finance team to track metrics related to revenue
Executive team to track major business performance metrics
And sales team to measure expansion revenue
Benefits Of Tracking Core Business Performance Metrics!
‘The number of clients won’t go down, and neither of the finances, if one understands the value to measure the metrics correctly.’
Today, a business even with the right number of new customers may face massive losses. If they are unaware of sales revenue, customer lifetime value, performance indicators, and the metrics that help business to grow. So here, we are going to showcase some beneficial points that can be used to assess the total number of benefits to the business performance metrics for you.
Improves performance and workability- when you continue to track your company’s metrics for a given period, you can tell how well or poorly the business is.
Alignment- highly useful in assuring how the company is moving towards the shared goal [aside from marketing and sales].
Comparative Analysis- Such metrics can just help reveal if the business is moving up to the mark or just underperforming.
Compliance – Metrics to keep your business as per the government and other other regulatory bodies.
Communication- Metrics of your sales, and overall business are one of the crucial tools for communication with customers, and shareholders.
21 Key Business Metrics
A business metric measures the percentage of customers and many more such factors, through which business can be assessed pretty well. The amount of [numbers of] such business performance metrics is quite a few, so let’s begin to comprehend them one by one.
Financial Metrics
The number of key performance indicators is the storyteller of a business and its financial health. It would help to comprehend various factors such as performance, efficiency, present liquidity, and profitability of the business.
Gross Profit
The amount of capital your company would generate after cutting the cost of making and selling the product or the services. When the right gross profit in a specific calculation comes in a low amount, it means that the revenue is significantly lower than the purchase or production cost. Or in a different scenario, it can also mean that you are charging way low for the product/service.
Remember the formula of the Gross profit, and calculate your gross profit.
Gross Profit = Sales Revenue – COGS [the cost of goods sold]
Gross Profit Margin
It is the percentage of gross profit, as it can help you get a percentage-based prospect over the Gross profit. It measures the percentage of profit margin, which can help you compare with your peers to cope with growth.
Here’s the formula to calculate the gross profit margin,
Gross Profit Margin = (Gross profit/Revenue) x 100
Net Profit
A company regularly gets income through its business minus expenses, that is profit. For customer satisfaction and a much better experience, this profit can be used to reinvest in the business. And more than that, it can help you cover all the essential expenses like taxes and other finances.
Here’s the formula to calculate the net profit,
Net Profit = Total revenue – Total Expenses
Net Profit Margin
It’s a percentage-based perspective of net margin, for example when you divide the profit by 100, you get your Net Profit Margin. It helps businesses to track the flow of money, like how much they are investing and where. And how much profit they are getting back!
Net Profit Margin = (Net profit/Revenue) x 100
Cost Of Goods Sold
In the first financial metric, we have used this term, what is it? This term deals with the expenses you are spending for your product or services. It will include the raw materials, production labor, cost of manufacturing, and other direct costs.
Cost Of Goods Sold = Inventory At Beginning + Purchases – Inventory At End
Customer Lifetime Value
After the term Customer satisfaction is fulfilled, he/she will spend some specific amount, right? That total revenue it will generate for your business over the entire relationship with your business. it is also termed as CLV, and low CLV will indicate, that customers are not coming repeatedly.
Monthly Recurring Revenue
Metrics that help on the front of the business, month-wise. In simple English calculating revenue monthly, is highly useful for monthly subscription-based services.
Operational Metrics
These metrics will provide the right data for the operations you have conducted. It will help you on the front to the data-driven decisions, and metrics that can help you streamline your operations.
Cash Flow
It is simply the flow of cash you see moving in and out of the business. Customer satisfaction, conversion rate, and various other metrics can influence it quite nicely. It is one of the great metrics that helps to track insights of liquidity.
Operating Expenses
Whether you are giving salaries, or paying expenses like rent, car, and other utilities, all those are counted in operating expenses.
Capacity Utilization
As the term suggests, it really displays how well you are utilizing your manufacturing facility, its production capacity, and its operations.
Inventory Turnover
Inventory turnover is a metric of a business, that helps you assess how faster you can clear out your inventory. A high rate of such a kind would suggest good business with better cash flow, while a low rate means there is overstocking.
Throughput
This metric indicates the outcome of the manufacturing units, like how efficiently fast you can produce. A low rate would go against the customer satisfaction and conversion rate.
See More: Unlocking the Power of Key HR Metrics: A Comprehensive Guide
Give your business a Fine taste of efficiency!
How efficiently are you working on your business? And what are the metrics suggesting? Have you bid your farewell tiresome paperwork yet?
Efficient businesses never do tiresome paperwork. They streamline their operations with Superworks!
Sales Metrics
To measure the performance of the sales team, these metrics are highly crucial.
Sales Target
It comes with a simple goal, to achieve a fixed target in a given period.
Win Rate
You can have a better idea through this metric when you use it for assessing the sales deals. Like how many were there, and how many have been cracked.
Pipeline
It is a visual representation of sales opportunities, or the deals in their different stages, and potential leads.
Sales Cycle Length
A simple cycle from the early contact to the closing of the deal is known as the sales cycle length. Here, shorter cycles are better, because longer one drains more time and resources.
Innovation Metrics
These metrics assess the speed and pattern of your innovation.
R&D Expenditure
Financial resources are provided by the organization to do R&D [research and development].
Innovation Rate
It refers to the speed and frequency at which you are introducing innovations. It can be services, products, and even ideas.
Time To Market
It states the time for any new service, or product is taken from a simple concept to the developmental stage to be available to use.
Number Of New Patents
Refers to intellectual assets of yours and unique inventions you have accomplished to secure in a given time for your organization.
Number Of New Products
New offerings, or newly offered products or services to the people, that are introduced in a given time.
There are more metrics lined up, like customer acquisition cost, employee performance metrics, conversion rate, turnover rate, net promoter score, and more that we are going to explain in an upcoming blog.
How To Track Your Business Metrics?
You should keep track of project performance metrics because it is one of the first steps to track your business performance metrics. Among the ideally perfect project management business performance, you can get some finest Project manager performance metrics examples over the web. However, you should never abandon these 3 steps-
Recognize your key metrics, and set your goals accordingly.
Gather all your data in one place
Go through your key metrics and analyze
Best HR Strategies With Superworks
In the stream of business performance metrics, what you can get through the best HR management software in India! Or how the best HRMS software in India can help? To answer this we would like to mention that every business requires the best HR processes, as it is crucial. Because it is highly required for maintaining Key HR metrics, and better functioning for the business.
When you need to function better to seek growth and sustainability you have to have the best HR strategist with access to the ultimate HR toolkit.
Concluding With Key Advice Over Metrics
Here we made sure to list all the key factors of the business performance metrics, in the simplest tongue. So each and everyone can understand the depth of this topic, and not just finance experts. So implement this knowledge in your business to grow like never before. And stay tuned, because soon we will get back to you with more crucial metrics that can help you track your business growth. And that is the kind of place Superworks is!
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