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Last week we talked about the importance of developing a performance measurement system. Here's some pointers on how to do this:

1. Clearly define your mission statement (normally part the business plan).

2. Identify strategic objectives and goals using your mission statement as a guide.

3. Catalogue exactly what your company does as a set of inter-connected business processes.

4. Develop a KPI for each process that measures how well the business is doing in that particular area. (It should be simple to understand, easy to respond to and credible in the eyes of its users. It should also facilitate learning and therefore continuous improvement.)

5. Measure regularly and use the performance results to locate areas of opportunity and improvement.

6. Provide feedback to all levels of the organisation.

At Paul Martin Chartered Accountant Ltd we can discuss this with you and provide greater insight into developing a performance measurement system to suit your business. Call us on (09) 576 4166.

If you're serious about succeeding in business, chances are you're already doing something different or better than the business next door.

That's what having a competitive edge is all about - offering something different to encourage customers to come to you rather than your competitors.

But it's not enough just to have the edge; you've got to keep improving it. And to know how and where to make improvements, you have to be able to measure your business performance.

Traditional data not enough

Traditional accounting-based performance information is extremely important to understanding the financial health of your business, but these days it's not enough. It ignores the key issue of linking operational performance to the business's strategic objectives. As well, it's often inadequate for the strategic decision making needed to expand a business.

Surviving in business today is more about measuring the value you add. It's about measuring how well you are performing against your business goals and objectives and, significantly, where you can improve.

With that in mind, what you should now be looking to measure in your organisation is:

- How well you are doing operationally such as in customer servicing, delivery and accuracy
- How well your customers think you're doing such as in satisfaction levels and retention rates
- How well your employees think you're doing such as in satisfaction levels, productivity and retention rates, and of course,
- How well you are doing financially such as in return (profitability) on net assets.

While keeping financial soundness as a principal factor, businesses today need to venture beyond costs and profits and look to a variety of measures in order to maintain their competitive edge and succeed.

Key Performance Indicators

The trend these days is for small and medium-sized businesses to measure performance using Key Performance Indicators (KPIs). A KPI is a way of measuring a particular business process, a bit like evaluating how well the company is doing in that particular area. By recording and analysing KPIs company-wide the business owner can see at a glance which processes need attention.

KPIs provide the detail measures of your business that financial measures can never reach. And what good is an A+ profit and loss sheet when you're actually losing customers hand over fist through slack customer servicing. If, however, you were using KPIs to measure:

- What customer deadlines have been missed?
- What is the conversion rate from quotations to sales?
- For which department were customer complaints received?
- What is the direct cost of complaints?

Then you would already have seen why you were losing customers, how much it was costing you and exactly where you would need to start making some improvements.

If you rely solely on traditional financial data you cannot get an accurate picture of what is really happening in your business.

A set of inter-connected business processes

In order to develop relevant, meaningful KPIs that will accurately measure your business, you need to catalogue what your company does as a set of inter-connected business processes. Once you've catalogued each process you need to develop a KPI for each one which can measure how well your business is doing in that particular area. Once in place make sure the information is collected regularly and provide feedback to all levels of the organisation.

Results from this type of measuring system are more meaningful to the day-to-day work of employees than financial data, especially when they are taking part in collecting the information. A set of financials doesn't have any relevance to their jobs but individual processes do â€" dealing with customer complaints immediately or servicing orders more quickly is something employees at the coalface can definitely aim for. These small improvements are more likely to make the biggest impact on your business.
 
This theory of performance measurement, often known as the 'Balanced Scorecard Approach', requires management to focus on factors that create long-term economic value and strategic benefits to the organisation. It focuses the organisation on carefully chosen, actionable measures â€" things that business line managers and their teams can influence directly.

For assistance setting up a performance measurement system for your business contact Paul Martin Chartered Accountant Ltd on (09) 576 4166.

Cloud accounting is transforming small business financial management. More and more businesses are choosing a cloud product to run their business, achieving cost and time efficiencies as well as superior reporting and other benefits.

To find out more about the two leading products on the market (MYOB and Xero) and to help you assess which will provide the best solution for your business, attend our free seminar in March. Click here for more information.

Netiquette - Maintaining Your Inbox


1.  Have trouble receiving emails from certain people?  Add their email address to your approved senders or address book so they get through your spam filter.

2.  Clear your spam filter regularly. Nine times out of ten this is where that important email you were expecting ended up.

3.  Regularly check your junk email.  Sometimes important emails will end up here so don't bin them by mistake.

In our last blog post we talked about how to recognise burnout - before you get burnt. However, if you feel you feel you might be starting to burnout, here's some ideas for minimising the effects:

1. Establish a morning ritual.  Don't start the day late, groggy or hungry. Enjoy time in a favoured spot (living room, local café etc). Feed your brain, breathe and ease into the day.

2.. Exercise regularly. It will increase blood flow to your brain, relieve stress and offer much needed time out from work.

3. Expand your social horizon.  As they say, get a life! Don't be trapped by daily boredom. Bring back variety.

4. Relinquish control.  Enjoy your time outside the office; your business can probably survive without you.

5.. A holiday is a break from work. Turn on your Out of Office message, record a detailed voicemail message, ignore your mobile and if necessary delegate responding duties.

6. Get out and improve strategic brain flow! Partake in regular strategic brainstorming outside of the office.

7. Don't get hung up on what hasn't been done. Focus on the current task and give it your undivided attention.

8. Don't take on other people's issues. It's great to support a colleague or employee in personal conflict but don't let someone else's baggage weigh you down.

9. Learn to say no.  Too much on your plate? Surrender! Analyse what is consuming your time and delegate.

10. Invest in your personal development. Grow your skills, both relevant to and independent of your current role, You will never know when a new role could emerge.

11. Carefully manage your calendar.  Leave space for impromptu things and 'share' your schedule with others.

12.. Writ a blog. Direct some of that pent-up creativity and vision online - it might even help your business!

13. Become a volunteer. It might satisfy you to offer your skills to something outside of your own organisation.

14. Get back to the drawing board. Review your job description and key tasks, what could you do better, more creatively? Just imagine it's your first day on the job.

Burnout can take years to set in and finding the right solutions won't happen overnight either. Learn to recognise your triggers and the reasons why you're feeling stressed by your working life. Then you can make direct choices to get back on track.

Recognising burnout - before you get burnt


Whilst you've just had a summer holiday and hopefully are rested and refreshed, it's important to remember that burnout can sneak up on you. Burnout is a contributing factor in the downfall of many SMEs. What once made you joyously jump out of bed can leave you hitting the snooze button on the alarm clock.

There are many reasons for burning out:

- Burning the candle at both ends. Driven workaholics often find their ambition pushes them over the edge.

- You're tired and bored.  You've been a mouse on the same wheel for too long and productivity is probably slipping along with your enthusiasm.

- You're under-stimulated. Your current role offers few challenges and little recognition of your skills. You feel unmotivated, on a one-way trip to nowhere.

Any bells ringing? Perhaps it's time to figure out why you're feeling this way in order to make effective choices and get your career on track. Your job accounts for roughly 40% of your waking life - generally it should be stimulating and enjoyable.

Christmas Holidays 2013/14


Our office is now closed until Monday 13 January 2014. Wishing you a very happy Christmas and holiday season and we look forward to working with you in 2014.

The concept of green business is nothing new. As the world embraces cloud based software and aims to reduce carbon emissions, it's time to get on board - whether you're motivated by minimising costs, attracting energy conscious customers or making a difference.

According to the EECA (Energy Efficiency and Conservation Authority) most businesses can reduce their carbon footprint and save at least 20% of their energy costs. It's estimated that 10% can be saved through simple no/low cost actions (with a payback of 12 months or less) and a further 10% with some investment and a longer payback of 1 - 5 years.

Nominate an energy saving leader who'll oversee the development of a meaningful plan and its implementation. Remember it's best to make several changes at once.... you'll notice a real difference and happily monitor your on-going success. Being energy conscious should be a part of your business' daily decision making process.

For more information visit the EECA business website at www.eecabusiness.govt.nz. You'll find some nifty tools and calculators to help you measure your existing footprint and the success/savings you'll achieve as you implement subtle changes in your business.

The Remote Workforce


Working remotely can be an attractive proposition for both employers and employees. The virtual worker is rewarded with job flexibility - providing their services from home, separate or even multiple office locations. The employer can streamline their business, and minimise overheads.

The fundamental reason for this increasingly popular workforce is the growing access to technology. Technology such as the smart phone and tablet are becoming mainstream amongst professionals. We can now perform tasks very effectively from almost any location. Quite simply, technology is driving efficiency and communication.

Remote workers can wear whatever they want, avoid traffic and related travel costs, potentially dictate their working hours, all while avoiding the bulk of office distractions and internal politics. In some industries, it's highly likely that this style of working and managing will be prevalent in the future.

As the world heads towards the 'post PC phase', now is the time to test the 'remote office' with your staff. If you remain inflexible you may miss the boat and run the risk of losing touch with your employees and customers. If your competitors are cutting operating costs by managing a virtual workplace, this will be reflected in their prices and their share of the market place.

There are possible downsides. Workers may feel out of touch, find it harder to communicate with their seniors, losing sight of a tasks and predetermined outcomes. Achieving the ultimate remote work balance will be important and perhaps heavily dependent on management.

Not everyone is suited to this style of working - or managing. The virtual workplace suits self-motivated employees, capable of working around distractions, and comfortable working in solitude. If your employee doesn't tick these boxes then perhaps they're better off in the office.

Holidays for busy business owners


Think you don't have time to take a holiday? Holidays are vital for tired, stressed business owners. Not only is the habit of taking regular holidays linked to reduced mortality and lower incidence of heart disease, but holidays have myriad benefits.

Going away with friends and loved ones, or taking solo time out is great for your mental health, reducing risk of depression and also alleviating stress. Extra sunshine helps boost Vitamin D and a few hours' extra sleep helps our well-being in general.

Holidays also allow more time to bond with family and make exercise fun. Go for walks on the beach, a city walking tour, hiking and tramping or playing backyard cricket.

Depending on your destination, you are likely to expand your mind also. All that botany, marine biology, history and culture leave little room to stress out about the banalities of the office. And there is the added benefit of keeping your mind challenged and taking your family members on a voyage of discovery.

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