I’ve invited an expert on measuring business performance, Bob Elliott, to write a post an article on how small or home-based businesses can measure their performances. Choosing the right performance measurement tool for your business can be a Herculean task. However with a little bit of research and effort we can utilize popular performance management tools to augment our business.
Bob is the CIO at Strategy2Act.com, a leading BalancedScorecard software developer. Bob takes part in software designer,bringing requirements of CEOs and business owners into the softwareand online solutions.
Business is about measure and control. So what measurement tools should we use?
The ability to measure business excellence and its performance provides businesses with insight into the financial as well as non-financial ways to analyze their performance in an easily understandable manner. Helping in the process of value creation and creating a pathway for sustainable growth, dynamic measurement of business performance serves the ability to measure as well as control a business so as to steer it towards an optimum ‘grown pattern’. By measuring and controlling business performance one will be able to apply best business practices, execute inventive thought processes, and learn how to implement easily incorporable business management techniques for increased revenue.
Controlling a business is as important as initiating it. This is to say that one will be able to exercise efficient control over the business operations with the use of ‘ground breaking’ management techniques, inventive frameworks and managing tactical value guidelines for achieving excellence in business processes. Involving active decision making, one needs to go through various business management methods and requires an initiation of efficient business practices given below:
- Optimizing business resources
- Motivating employees and business partners so as to manage intellectual assets
- Building a learning environment in the organization
- Incorporate change and motivate innovation
Apart from the business practices that initiate efficient business management, given below are the measurement tools that are needed to measure the performance of a business:
This strategy has been utilized by a number of organizations for measuring and managing their performance by creating a complete view of the operations. There can be several aspects that can be represented with this scorecard to count the progress being made in different directions. Such is the strength of this management tool that about half of the Fortune 1000 companies have used it for betterment of their business processes.
2. Economic Value Added
This takes the volume of economic value added to the inputs as a measure used to gauge the performance. By taking various steps to increase the economic value, one can draw more and more customers towards them.
3. Activity-Based Costing
Activity based costing aims at improving the processes by making activity as the basis. In this, one bifurcates the activities that occur in the whole process and later aims to bring down the costs associated with those; thereby making the total amount of costs lower.
4. Total Quality Management (TQM), Six Sigma
These are some of the Japanese concepts that have been developed for creating a perfect business environment. According to these, the managers should aim for minimizing errors to maximum extent and head towards an errorless field. Also, it states that quality should be taken as something to be infused by every person involved in developing the final product right from the initial entity. This is to say that every step has to be tested for the extent to which quality is added to the product.