Answering to the question of whether you are running your business effectively, most of the business leaders connect to profitability. If the profit is moderate, then they think that they are running the business effectively. However, profitability is one measure, and consistent profitability is a function of many parameters.
On a dipstick level, we can measure the effectiveness of running the business effectively. Some basic measures are the indicators of the effectiveness.
Customer order fulfillment:
Customer order fulfillment is one of the most important measures of your effectiveness i.e. How you are servicing your customer’s requirement on time every time. Meeting the customer’s demand on time with 100 % fulfillment guarantees to some extend about your business's longevity. Servicing the customer’s requirement is the reflection of your internal process robustness and the culture of the organization. In most of the small and medium size companies, meeting the customer requirement itself is the biggest concern.Inability to service the customer on time would eventually affect the profitability and survival. Fulfilling the customer’s requirement is hygiene factor that should not be compromised. If you are delivering the customer’s requirement on time and every time, then you can assume that you are running the business effectively.
Quality target fulfillment:
In today’s competitive environment, delivering the product or service with quality requirement is assumed as a way of living from the customer’s perspective. Meeting quality target is a reflection of your internal quality assurance and control systems. One of the major irritant from the customer‘s point of view is delivering the products with inconsistent quality. If you are meeting customer‘s quality target with your internal quality control and assurance system, then you can assume that you are running the business effectively.
You may be meeting the customer’s delivery, quality target, but if you are not making decent net profit, then you are not effectively managing the business. The reason could be your cost of running the business may be more than the revenue. Creating the surplus in the form of profit is vital for long term sustainability of business. Cost efficiency reflects how you are running the business effectively.
Ultimately, people working for the organization are a real asset and they determine the growth of the organization. If the people engagement is high, eventually it drives better order fulfillment, quality targets, cost efficiency and safety environment. If the loyalty and employee engagement is high, then you are running your business effectively.
Relook your organizational existing customer service level,quality targets achievement, cost efficiency and people engagement level to assess your effectiveness level of running the business effectively.