Your business needs a performance appraisal

Image of performance appraisal for your businessAs a business owner, you know that every employee in your business needs a regular performance appraisal. It is arguably the best way to measure the employee’s performance against the goals that were set.

You can discuss things with your employee such as what worked, what didn’t work and the reasons why. You can also discuss the areas that need to be improved and the potential challenges.

Crucially, your business also needs a performance appraisal

And you have to do it. Regularly. For the same reasons.

Some entrepreneurs were so worried about the world possibly ending at the end of last year (remember the Mayans?), that they completely missed the fact that the first quarter of this year has already gone by.

In business, a lot can happen in three months

In my own business, we acquired one of our competitors during the first three months of this year. This included all the discussions leading up to the transaction, the due diligence and legal process as well as the actual implementation of the take-over. Obviously there are still some things that need to be smoothed over, but for the most part it’s already back to business as usual.

Honestly, the speed at which all of this took place surprised me somewhat. I’ve waited longer for new bank cards.

However, nothing can happen in three months

It just depends on the goals you set for yourself and the urgency with which you worked to achieve them.

That’s the official version anyway. Unofficially, most seasoned business owners know that external factors (such as the state of the world economy or the oil price) could have an influence over your business performance.

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Sometimes you do things that just don’t work. Maybe you had an idea to increase your line of products or services, and it didn’t actually translate into more revenue. Worse, you now have to work harder to generate the same revenue.

Sometimes things just don’t work any longer. Maybe the advert you’ve been placing in the Yellow Pages for the past 15 years is just not generating enough leads anymore.

Sometimes you just have bad luck. Maybe your delivery vehicle got stolen and one of your star employees decided to start a ministry. All in one day.

You have to measure it

While there are many things to measure in a business, each business has only a few very important numbers. For example, real estate agents have to look at the number of appointments they managed to get with sellers, a percentage of which converted into listings, a percentage of which converted into sole mandates, a percentage of which got sold.

What are the crucial dials on the dashboard of your business that you need to keep an eye on?

Keep what works, fix what didn’t

This part is easy.

Once you know what contributed the most to your important numbers, it’s easy to do more of it. Conversely, if something didn’t add to the bottom line, stop doing it.

See this as a process of gradual improvements. The Japanese call it KaiZen. Your business will call it Success.

It’s never too late to start

It’s easy to get bogged down in the day-to-day slog of business. However, if you never work on your business, you will always just have a job in your business. This is how you remain self-employed.

Start with the performance appraisal of your business today and do it regularly.

This is the first step to becoming truly wealthy.

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