6 Tools for Measuring Business Performance

Running a consultancy takes a lot of know-how, not just within your area of expertise but also from a business point of view. Financial success is - of course - the end goal for many, but to achieve this you need to hold your business accountable in many areas. Some obvious, some perhaps not.?

How do you make sure you offer a more appealing service than your competitors, for example? Or that you’re following the best leads, and taking the best opportunities for success? That you stay aligned with your core values, and those of your clients?

It may sound complicated but thankfully, we’re not alone. These questions have been asked by many businesses - large and small - for years. As SMEs we can lean on the research of those who have come before us, and utilise some of the techniques they’ve put into place.?

What’s more - as business owners working directly with other SMEs - once we adopt and understand these techniques, we have the benefit of passing the knowledge onto our clients to advise and assist with their strategic projects. Much like I am doing in sharing this article with you today.?

Here are 6 tools that are popular for measuring business performance:?

The GE-McKinsey Matrix?

McKinsey - a global consulting company with countless clients, including many Fortune 1000 companies - likely need no introduction. But it was their work with General Electric that saw them develop the GE-McKinsey Matrix so widely used in business today. Essentially, this matrix assists businesses in understanding which strategies they should follow to see the highest ROI. With nine cells across two axis (Industry Attractiveness vs Competitive Strength of Business Unit), it encourages you to plot each possible project against the axis, guiding you towards a decision on where to invest time and resources. If you’re feeling a little lost as to where your priorities should lie, this tool is a fantastic guide.?

• Find out more here: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/enduring-ideas-the-ge-and-mckinsey-nine-box-matrix

BCC Growth Share Matrix?

Similar to the GE-McKinsey Matrix, the BCC Growth Share Matrix (Bolton Consulting Group) helps businesses identify the areas most worth investing your time and resources into - and which areas are probably not worth persevering with. It’s a growth and share model (these are also its axis) and asks users to categorise projects into one of four sections: Star, Question Mark, Cash Cow, Pet. The first three are likely self-explanatory, and the latter (Pet, sometimes known as Dog) refers to something that has a low market share or low growth. Simply put, by plotting your areas of business onto these axis, it should become clear which areas will benefit from greater investment, and which should be reduced or made redundant.?

• Find out more here: https://www.bcg.com/about/overview/our-history/growth-share-matrix?

Porter’s Five Forces?

The importance of understanding your competitors in business can’t be understated. Something Harvard Business School’s Michael E. Porter understood when he developed the Porter’s Five Forces model in the 1970s. Designed to help you gauge and understand competitive rivalry (i.e. industry competition: how many businesses are providing the same service as you), the threat of new entrants (how easy it is for another business to set up in your niche), the bargaining power of supplier and customers (the more businesses and/or competitors, the greater the consumer power, and vice versa), and the threat of substitute products or services (how easy it is for your clients to switch to a similar company).

This is a great tool to determine your strength and power in your industry vs that of similar businesses. And of course, to identify where you can differentiate yourself and increase market share.?Your clients may well have carried out this analysis as well.

• Find out more here: https://www.isc.hbs.edu/strategy/business-strategy/Pages/the-five-forces.aspx

Core Competencies

It’s sometimes easy to fall into the trap of assuming that bigger companies can offer greater value than SMEs, but this is simply not true. Every business has strengths and weaknesses; evaluating your company’s core competencies is a fantastic way to identify them, and to play to your skills. Look at it this way: can a large, global corporation offer such personal communication as you? Do their employees offer as much passion as you do? Are their employees as committed as you? These are just examples, but I’m fairly confident that the answers are no, no, and no. These (and likely many, many more) attributes are your key core competencies to offer clients. Lean on them, enhance them, shout about them - and you’ll soon find yourself on the road to finding - and retaining - your ideal customers.?

• A great way to start plotting this is by using a SWOT (Strengths, Weaknesses, Opportunities and Threats) too.?

Benchmarking?

Another tool you can use to stay ahead of competition is benchmarking. This has more of a micro focus than macro, and encourages you to deep-dive into your performance metrics vs those of industry peers and/or competitors. Which metrics and KPIs you wish to benchmark is really up to you, but some typical areas include production costs, revenues, employee turnover and process (or project) cycle time.?

Balanced Scorecard?

This is another tool to track beyond financial goals (though it will help with those, too). It’s a tool that will help you achieve a wide variety of long-term goals (for example, company vision, mission, and purpose) and/or identify areas that need focus in order to achieve said goals. Keeping a Balanced Scorecard helps you to stay on the right business track by - as the name suggests - scoring yourself using data points in areas such as Market Share, Revenue, Customer Satisfaction, Employee Morale, and more.?

My goal in sharing this information with you is not to overwhelm you, but to introduce you to different tools and concepts that can help propel your business forward. Depending on the stage your business is at, you may need only one or some of the concepts explained. Indeed, I suspect you’ll likely need different measures, for different areas of business, at different times.??

As consultants - especially when you work at a strategic level, it's useful to have a broader business knowledge and to be able to add value in addition to your expertise in HR or other people related consultancy.

As always, if you have any questions or would like to set up a call to discuss your business in more detail, I’d love to hear from you and help you on the road to success and growth.?

I’m also keen to know which you think is the most useful for you, your business or your client? Let me know in the comments, or via DM.?

Until next time, wishing you many business wins!?

Sarah Hamilton-Gill FCIPD

In the past two years, my team and I have supported over 100 new start up consultants and scale up businesses. We know what it takes to succeed, and have helped many people - just like you - to achieve their goals. Contact me today for a discovery call.?