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Performance Measurement


Picture of scales used to measure money. This is relating to the ability of a business owner to properly assess their business to make is more successful as defined by their goals.

Once strategies and goals are established, measurement techniques are essential in monitoring their performance and providing the insight for continuous improvement. Performance measurements assess the achievements of profitability, productivity, efficiency, and quality.

 

There are various ways to slice the pie, and the methods chosen should be best fits for the business and industry. A deeper dive into profitability analysis would include evaluating not only costs, but also investments, allocations, and valuations that align with the business model being looked at.

 

Some examples of matrixes to look at would be variable costs vs. fixed costs, contribution margins, returns on investments, and residual income generation. Business operations should not be “set it and forget it”, rather, a relatively consistent performance analysis process would serve the overall picture best. I offer the tool such as the "Balanced Scorecard" to get you started in the right direction without having to start from scratch or reinvent the wheel. The Balanced Scorecard consists of financial, internal business process, customer satisfaction, and room for improvement measurements to help you gain insight that can lead to improvement.

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