Top 3 Ways To Assess Your Business Performance


For measuring business performance, you need to set up key performance indicators (KPI), that is, the measuring metrics for your business. Any business is a combination of both quantitative(revenue, the cost involved, and total sales, etc.) and qualitative aspects (customer satisfaction, employee loyalty, and goodwill, etc.). Different companies would have different needs for assessing their performance, for example, MNCs would focus more on customer loyalty and satisfaction than small businesses, for whom focal points are revenue and production cost.

The managers can make a list of the KPIs crucial to their business, then set real, achievable, and measurable goals to assess and compare the business performance

business performance
Image source: Thinking Bigger

3 ways that can help you measure business performance:

Various businesses use various methods to track and record their KPIs. They indicate how effective is a business in achieving its goals, evaluates progress, and helps in noticing digressions in business. The ways in which you can measure your business performance are:

  1. By measuring Key operation variables
  2. Setting Employee performance standards
  3. Evaluating Overall market performance 

Now, the question is how can these be tracked?


Key operational variables mean the activities that affect the business directly, like, production, sales, and marketing, etc. We use the key operational variables to measure sales and financial performance.


It helps to track which product was sold more, compare the sales result of months and quarters, track sales volume in comparison with your competitors, effectiveness of marketing strategies on sales of the company, take note of any diversion, and total product returns and exchanges, etc. a business can prepare graphical charts or quarterly reports to summarize the same.

Financial performance

Conducting a financial review is crucial to assess the use of funds and better their allocation. To measure financial performance one can calculate business cash flow, cost, working capital, liquidity ratios, and financial leverage, etc. They are also important to assess the profitability of a business. 

Employee performance standards

Employee performance measurement can determine employee status, employee compensation, and employee loyalty. Such standards help to measure and improvise employee benefits and policies. 

The most commonly used methods are sales per employee, contribution per employee, profit per employee, and management by objective.

Overall market performance

Measuring overall market performance is crucial while measuring business performance. It helps to analyze the market share and market ranking by sales volume. It is also about understanding customer’s needs and competitors’ positions in the market. You can measure this by the use of SWOT Analysis, customer feedback surveys, benchmarking, and tracking the effectiveness of marketing strategies. 

Having a process to measure and track business performance helps business owners to identify the competition and strategize better to foster business growth in the long run.