Management: Key to Continuous Improvement
Assessing business results quantifies whether a business is progressing or regressing. Consistently higher sales and profits indicate a business is moving in the right direction. Continuously increasing cash reserves confirm a continuously improving business. The challenge with this approach to establishing whether a business is progressing or regressing is that it’s a lagging, not a predictive indicator. Click here to appreciate the difference between KPIs and KRIs.
A less obvious yet highly effective method of gauging whether a business is progressing or regressing is a quick look at the management team. Those who have managers who are constantly seeking ways to improve their business from the perspectives of getting work (sales), delivering work (operations), and enabling work (finance and administration) are more likely to have a “continuous improvement” culture.
Those who recognize that there is always the opportunity to do and be better no matter how well they did yesterday, last week, month, or year will always outperform those who sit back when things are going well or adopt the “hope method” when problems exist that they don’t want to deal with.
A continuously improving business are more likely to experience an upward spiral of continuously increasing sales and profits as shown below while a business without a continuous improvement culture will have a downward spiral of continuously decreasing sales and profits that always lead to cash flow headaches.
Businesses that consistently grow their sales and profits have a “continuous improvement” culture. They recognize that no matter how well they did yesterday, last week, month, or year there is always the opportunity to do and be better.
The catalyst for continuous improvement is grounded in management teams who are 100% committed to reviewing the results of their decisions and actions from their business reports to identify what’s working well, where they are getting stuck, and what should be done differently. Click here if you want to learn how you can better use your financial statements to assess your business performance. Your click will lead to a “free” sampling of relevant financial metrics and ratios for your business from a certified BusinessCPR™ Business Scientist you can start to use immediately to identify where immediate improvement is needed to make more money.
