Business Performance Measurement: Why measure more than financials?

The starting point for most social enterprises in measurement is to set up a bookkeeping system to track money in and money out.  While financial bookkeeping and accounting are fundamental to running a business, it may also be useful to track other aspects of business performance early on to be able to make good operational and planning decisions. So if you're increasing profits, it can be useful to understand: What led to that? How you can do more of that? What decisions led to the improvement: targeted sales, marketing campaign, staff hire, new equipment investment (among other things)? Having a picture of the critical factors driving success, can help inform wise future investment decisions.Just looking at profit won't reveal this. 

 Another reason for measuring other aspects of business performance is to motivate good performance. For some people within an enterprise, the overall financial picture might not be relevant, or it may not be clear how they influence it. So if you're somebody that is doing sales and marketing, you can be motivated by understanding what sales you are making and to specifically have measures around sales. 

Listed below are some things that you may want to know and show about business performance and suggestions on what to track.  You can also find more about business performance measurement in the Tools and Resources section where you can filter tools there by topics including business performance.

We are attracting the customers we need to sustain and grow the business

• # customers
• $ revenues generated by new customers
• market share
• average deal size

We are adequately satisfying customer needs 

•  % customers 'satisfied' or 'very satisfied'
• % customers who recommend services
• # times services redone or refunded
• # complaints/kudos

 We are developing enduring relationships with customers  # or % returning customers

• % customers with a relationship >x years
• % willingness to reorder

 We have effective marketing and sales  

• sales pipeline/funnel indicators
• marketing Return on Investment
• customer acquisition cost
• digital marketing analytics

 We make the most of what we have production costs/inputs per unit

• revenue per unit
• units produced
• specific cost as % of total costs
• % capacity utilization
• % on- time deliveries
• time to complete task
• frequency of work stoppages
• wastage

 We have the right amount of inventory turnover

• cycle time
• inventory levels 
• lost orders  

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We provide a consistent, high quality product / service

• quality ‘escapes’
• #/% times service repeated
• adherence to product/service quality standards
• # complaints (or kudos) related to quality