Effective Business Performance Metrics

Effective Business Performance Metrics

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Every entrepreneur looks at the financial structure of their business. One way to quickly understand the financial health of your organization is to look at the various financial ratios. Financial ratios provide insight into cash, credit and inventory situation. They reveal the stability and health of your business. Businessmen must review these ratios to understand the changing trends in the company.  

There are four basic types of ratios. They are: 

Liquidity ratios 

These ratios measure the amount of liquidity (cash and easily converted assets) that you have to cover your debts. 

Current ratio also called working capital ratio is used to measure your company’s ability to generate cash to meet your short-term financial commitments. Quick ratio measures your ability to access cash quickly to support immediate demands. A ratio of 1.0 or greater is generally acceptable. But this ratio depends on your industry. A low ratio means your company might have difficulties meeting obligations or taking advantage of opportunities. Higher ratio means it’s time for you to invest more of your capital in projects. 

Efficiency ratios 

These ratios are measured over a longer period of time and provide additional insight into different aspects of the business

Inventory turnover looks at how long it takes for inventory to be sold and traded during the year. This ratio will help you in understanding where you can improve in inventory management.  

Inventory to net working capital ratio can determine if you have too much of your working capital tied up in inventory. It is better if this ratio is lower. Evaluating inventory ratios depends on your industry and the type of business. 

Average collection period looks at the average number of days customers take to pay for your products or services. You can improve this ratio by establishing clear cut credit policies and also providing incentives to encourage payment. 

Profitability ratios 

These ratios help in understanding the financial viability of your business. You can also gauge what your position is in the industry.  

Net profit margin measures how much a company earns relative to its sales. Companies with higher profit margin are generally flexible and efficient. 

Operating profit margin or coverage ratio measures earnings before interest and taxes. Through this you can assess your ability to expand your business through additional debt or other investments. 

Return on assets (ROA) ratio tells how well management is utilizing the company’s various resources. Return on equity (ROE) measures how well the business is doing in relation to the investment made by its shareholders. Profitability ratios are also compared with several companies from the same industry to know where you stand. 

Leverage ratios 

These ratios provide an indication of the long-term solvency of a company and extend of your use of long term debt to support your business.  

Debt-to-equity and debt-to-asset ratios are used to see how your assets are financed. It can be financed from creditors or own investment. 

The ratios mentioned above will help you determine your financial position. Closely examine other factors and data to fully understand your business performance.  

The 7 Step Guide to take your business to the next level

The 7 Step Guide to take your business to the next level

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More and more successful people are starting up their own businesses every year, and realizing the benefits of being your own boss. Most new entrepreneurs do most of the job themselves so that they are in control of what needs to be done. However, there will be one point in time that you will want to grow business for strategic and financial reasons.

Here is a guide that discusses seven ways to take your business to the next level.

Find Your Product

Success only comes with efficient marketing, passion, an effective team, and an amazing product or service. The business world is highly competitive, which means to be able to get noticed you would have to have an outstanding product that people would want buy again and again. One way you can figure out what the new product should be is to understand and consider what problems people have and how you can solve it. It helps to create a product that you are passionate about since it would give you a comprehension on what is truly needed.

Act Fast

When there is an opportunity in front of you, it is good to act quick and make the most of what you can. Certain entrepreneurs may be scared to accept new opportunities, but being afraid of it is blocking your growth to success.

Grow Your Team

Some people run businesses on their own, but the best way to successfully grow your business is to hire more people. Hiring employees specialized in design, finance, information technology, marketing, and sales would give you more insight and new ideas to make your business grow.

Be the Best Manager

To efficiently run your business, you have to be the best manager you can. This would require you to communicate with your team, set goals for the company, make wise decisions, make time for your workers, recognize achievements, and enjoy your job.

Network, Network, Network

Attend events to network with other people. Events such as business seminars and conferences is a great method to network with other successful businesses and learn strategies from them. You would also have the opportunity to meet possible customers and let others know about your business.

Business to Brand

Turning your business into a brand can spread a good reputation for your company. This can allow it to become highly recognized and result in having customers choose your business out of all the others. Branding requires good marketing and logos that stand out, in order to have your clients remember them. Promoting your brand through social media is also a great way to endorse your business.

Invest Sensibly

There may be times you may have to buy new infrastructure, stocks, or properties to grow your business. This would cost a lot of money in the short term, but it would lead to a high profitability in the future. Another way to invest is to rely on business investors or business crowdfunding. To attain an investment, it is wise to come up with a tactical business plan that has a strong vision of your outcome.

Digital and Analytics – Moving forward in Sales

Digital and Analytics – Moving forward in Sales

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Most business leaders are fully aware that in order to keep their sales teams up to date, they need to invest in sales automation and associated software that have become an indispensable part of sales and operations. 

Role of Digital and Analytics

The truth however is that mere automation is not enough. Only by harnessing the power of digital and analytics, it will be possible to identify, drive and even scale meaningful changes that will serve a company well. Companies who implement these changes in a disciplined way undeniably reap benefits, both in the short and long terms. 

Best Practices

It will pay off well, if business leaders bear in mind the following points 
  1. Mere automation is not going to significantly increase sales performance. 
  1. It is important to identify the intelligence that is required. While the market is awash with several cool intelligence and analytics products, not all of them will serve your sales reps. Involve the sales reps in the process, use data to capture the effect of all sales and then use the insights to drive revenue. 
  1. The sales leaders need to focus on capabilities that make a difference. The  parameters that will greatly influence the sales performance is the size of the pipeline and conversion rate, and ideas that are in line with overall transformation vision of the company. 
  1. Deploy the analytics tools in skill management and development. Identify the skills and strengths of your sales personnel. Simultaneously, gaps in skills will become evident.  Relevant and personalised training can be provided to your sales force. 
  2. Beat the drum! Make sure you demonstrate progress to the team and stake holders. Every small win, real-time insights and news about individual contribution will spread a positive feeling about the goal. Further, this kind of communication will make the team feel the progress they are making, motivating them to do more. 
Over all, digital and analytics tools can significantly enhance a sales capacity. However, it is important that there is a clear vision in sight and the tool should be used to achieve the same. The tool must be a significant part of a pragmatic, complete and integrated solution.
Planning for Success

Planning for Success

It is hard to plan for something that you have no idea about. And, that is exactly what the future is, the unknown. Most companies are also unclear about how you can grow your career or what they would even expect of you to advance further. Another additional layer of stress is that at the same time you are also at competition with everyone else in your field who also want the same things as you. So really, you need to know how to develop your skills, but also, how to develop them faster than everyone else.

A viable growth model 

The 70-20-10 model was made to help people grow themselves the fastest. Basically, it breaks down to 70% of your professional growth will come from the direct work experience that you have from jobs that you have done, 20% is from the networking and interactions that you with other people and professionals in your field, and lastly 10% is from the educational training you undertook. Also, take every opportunity and presentation as an avenue for growth. Once you’ve completed the action, ask for feedback, and then perform the next time at an even higher level. Here is a 3 step strategy to plan your success:

1. Build a realistic vision

The first step is to gauge where you are currently and where you would like to be. Once a clear goal has been outlined you know what you are working towards instead of aimlessly striving towards an unclear vision.  When you are doing this the most important factor is to be realistic and honest with ourselves. Although objectivity can be hard, it is essential in mapping out your success. For starters, your ego has to be left behind and asking for input from a respected superior who you know will not sugar-coat the truth is a good place to work from.

2. Learn from experience

Two types of experiences will help you grow. The first type are functional experiences. These are things that help you hone in on a particular skill. The second type are management experiences. Management experiences help you develop skills under pressure and lead a team as well.

3. Seek advice

Another tip is to speak to people who are successful in your field. They can offer insight into what steps they took to reach where you would like to be and guide you in the right direction. Leave your ego behind and ask for input from respected superiors who you know will not sugar-coat the truth and guide you in the right direction. By mapping out your plan, seeking experiences that will help you grow, and speaking to successful professionals in your filed you can easily plan for success.
The human factor in a digital sales world

The human factor in a digital sales world

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The Human vs. Digital debate has been an ongoing one for years now.  Traditional sales folk vouch by face-to-face conversations, while e-commerce sales units think that everything needs to be made digital. While it would be just outright vacuous to state that digital is not important for sales, it would be equally mindless to dismiss the importance of the human touch in sales.

B2B Sales Scenario

In fact, B2B sales leaders employing effective digital achieve a several fold growth compared to their peers who do not employ the same level of digital in their operations. However, various surveys have highlighted a very interesting fact – Customers love the human touch backed by great digital interactions. It is however a very tricky balance, because the one thing that annoys customers is too much interaction. There are no tried and tested recipes to get the human-digital ratio right in the business. Businesses need to create the right human-digital proportion that works for their customers and operations. Research shows that B2B customers want both human and digital interactions on their buying journey, preferring one over the other at various stages.

Finding the right balance

When researching a new product or service the majority of customers who enjoy digital, still want human interaction. In the evaluation and consideration stages, customers mainly prefer digital tools that provide factual information, like a comparison tool and reviews. Again, post purchase, during renewal, cross-selling and upselling, digital tools remain much preferred. The trick is to identify where human interaction is most wanted and ensure it is provided – either as expertise available via a web chat or simply having a person pick up the phone when a potential customer rings.

Invest wisely

Companies also need to invest in digital where it is most valued and where digital can enable humans to do a better job of interacting with customers when the human touch is required. Digitally enabled tools can help enormously to reduce slow turnaround times, for example by connecting customers with experts via a web chat. By taking stock and analysing the sales performance of the recent past, it will be possible to identify areas of improvement. Sales leaders must then focus on whether they can implement the change digitally or by introducing some human interaction there. Either way, the optimal digital-human balance is a proven factor in boosting sales performance.