Quantitative measurement of the results achieved is one of the key tools in management. It can be called different names: KPIs, metrics, and statistics. And the indicators should be measured by both employees and the business owner.
What is Statistics?
This science is what allows you to quantify the results you get. However, before it is implemented, it is necessary to determine for each employee their so-called “valuable end-product.” It is better to do this after developing a functional organizational structure describing key business processes and defining areas of responsibility.
Management also has its product. We are talking about the successful development of the commercial organization. The work of the entrepreneur is different from what the CEO does.
Because the business owner acts as both a strategist and an architect responsible for the company’s development, and the director usually only manages its operational activities. But sometimes, the roles are combined or shifted, and this must be taken into account.
If the world were perfect, a growing business’s main measure of success would be its value. But today, such a measure of valuation is only acceptable for corporations that have gone public.
In the real world, business valuation systems are based on gross profit. There is a coefficient that depends on the area of business activity, the corporation’s history, and the owner’s personal preferences. The latter can use the gross profit for the week as a basic statistic to guide further valuation.
Using Statistics in Business
Statistics are important measurements of key parameters. Its use allows the business owner to assess easily – is everything okay? Is the company on the right track? What are its prospects? In this case, identified trends and figures exclude ambiguity of interpretation. For example, the selected areas of work are usually successfully closed by 30 tasks per week.
However, the last week demonstrated a decrease in some sectors of up to 5 tasks. So, it is clear that something is wrong here, and the reason for such a serious reduction must be identified immediately.
If we use such an approach for each significant business process, the company’s management will become much easier, and the efficiency of commercial activities will increase dramatically.
One of the main indicators the company owner pays attention to is income. However, it is equally important to monitor the ratio of profit to the volume of services rendered.
It is important not to collect more money from clients than the service provided. Keeping track of production work and increasing the volume is necessary to avoid negative situations.
The average salary is another important indicator that should be measured. In a successful company, it should grow because people are the most important resource. One of the goals of a business owner is to make their employees thrive. Using statistics helps the business owner monitor their company’s performance.
All is well if the achievement graph goes up for a long time. If the graph isn’t growing, however, that’s a signal that something needs to change. However, statistics are only a tool, not an end in themselves.
The company’s owner must be able to interpret and use its data correctly to improve his business. And, of course, he will need good specialists. Therefore, those who put in a request to “do my statistics homework for me” today may become valuable and well-earning employees tomorrow.