Measure performance and set targets

Measuring business performance and setting targets are essential for business growth. While small businesses may manage without formal processes, growing businesses need clear systems in place to control these processes. This is especially important if you plan to:

• hire more staff
• create new departments
• appoint new managers or directors

Benefits of strategic business reviews

Strategic business reviews help you understand your business performance and identify areas for improvement. They are useful if:

• you are unsure how your business is performing
• you want to maximise business or market opportunities
• your business plan is outdated
• your business business lacks clear direction
• you are struggling to respond to market changes

Setting performance targets and KPIs

Understanding business performance across different areas helps you identify strengths, weaknesses and opportunities for improvements. To measure performance effectively, focus on key performance indicators (KPIs). These are the most important metrics for tracking progress and improving business performance.

Which KPIs should you measure?

Track both financial and non-financial KPIs to measure business performance effectively. For example:

• customers - number of customers, usage levels, customer acquisition and retention rates
• customer service - waiting times, complaints and reasons for dissatisfaction
• market share - how your business compares to competitors and whether it is growing
• staff - employee satisfaction, work quality and attendance

Choosing the right KPIs helps you track progress, improve performance and make better business decisions. See how to choose the right key performance indicators.

Benefits of setting performance targets

Once you have identified your KPIs, use them to set clear performance targets. Targets give your team clear goals and direction. Break down your main business goals into smaller, manageable targets. This makes it easier to build them into day-to-day operations and achieve long-term business growth.

Set your business strategy

To set a clear business strategy, focus on your goals, markets and resources. Consider:

• Business direction - where you are now, where you want to be in 3 to 5 years, and how you will get there.
• Target markets - which markets to compete in, how to enter them, and how they may change.
• Competitive advantage - how you will stand out and outperform competitors
• Resources - the skills, finance, assets and systems you need, and how these may change
• Business environment - internal and external factors that could affect performance
• Success measures - how you will track performance and adapt as your business grows.

You may need support to answer these questions. Speak to advisers, senior staff or business partners. Working together can improve decision-making and strengthen your business strategy.