Management July 7, 2011 Last updated July 7th, 2011 1,722 Reads share

How Healthy Is Your Business?

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business management, measuring successDetermination of the health of a business is undertaken through the implementation of metrics that allow the management team to understand how different aspects of the business are running.

The most obvious, of course, are financial metrics and it is these that most businesses are, I suspect, acutely aware – at least those that are being run well.

  • Pipeline, revenues and gross margin.
  • Average gross margin on a client engagement/project.
  • Operating cost ratios.
  • Average project engagement value.
  • ….

Essentially the measures around the money.

But there are other metrics that perhaps should be considered as part of the overall health check of the business.

Employee Satisfaction

And yes, this does apply to a single person business. For services based business, the ability for it to deliver it’s market offerings is directly tied to the capabilities of the consultants working within it.

If the sales and delivery people are not happy or content in their work, there is a significant chance of them leaving the business and taking all of that valuable information with them. Recessions don’t prevent prevent people from departing for other roles – at least, not the good ones who you are trying to retain.

It is really important to understand the mood of the people within the business and they should be given the freedom (and direction if needed) to speak up and make themselves heard. This can be done in formal meetings, an internal survey or just a chat over coffee. The intention needs to be to ensure that concerns are heard and acted on (where possible) and not ignored.

Customer Satisfaction

This can be a little amorphous in nature and also difficult to achieve. Perhaps the most telling mechanism of measuring customer satisfaction is there willingness to engage as a positive reference for your business.

But sometimes it is important to get under the hood and to understand the customer satisfaction at a project level.

  • Were they happy with the design process?
  • Did they understand what they were getting from the offset?
  • Did they feel informed at all stages?

Again, surveys can be developed in line with the specific needs of your services delivery model. Or simply having a non-aligned person i.e. someone who is not responsible for sales or delivery, having a conversation with the customer can yield really useful insights into the overall customer satisfaction with your business.

Operational View

Essentially this is about measuring how effectively and efficiently your business is running. It allows the business to assess how it compares with other businesses in the industry i.e. against industry norms.  The operational elements that could be measured include;

  • Ratio of tenders bid to tenders won.
  • % of billable time for each resource in the business. Is it as expected? Have you set that %?
  • Staff turnover ratio – linked into employee satisfaction.
  • Training undertaken vs. planned (important to remain current with latest trends)

The measures themselves are up to each business, but measured they should be. In reality, each impacts the financial metrics if they are not performing so cannot be isolated.

By measuring each element, your business can only become healthier and stronger in the longer term.

So, how healthy is your business?

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Barney Austen

Barney Austen

Budding entrepeneur working on software product solutions for business. My background is mainly operational and senior management roles in mobile telecoms and software houses. Areas of expertise include professional services, out-sourcing, team management and general operations management. I've made the conscious decision to create my own company having spent the last 20 years learning in the corporate world. In my contributions to this forum, I will share some insights and learnings that I've picked up along the way and hopefully they will be useful to some or all!

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