For a company to grow sustainably, it must be continually improving.
It should be no surprise that every business has areas in which it could optimize. In all likelihood, there are dozens of ways your own company could enhance its internal workflows, processes, and strategies.
But today, we will narrow our focus down to five overarching ways you can improve business operations. Let’s discuss the ways in which you can close and finesse your operational gaps.
5 Ways To Improve Business Operations
#1 Regularly Perform Financial Statement Analysis
To make improvements to your business, you have to be keenly aware of where you are succeeding or failing.
Financial statement analysis allows you to take stock of your company’s financial health and performance. It is necessary for complying with business rules and regulations and ensuring that the company is meeting the needs of its key stakeholders.
For starters, you will need to compile your key financial statements, including the balance sheet, income statement, and cash flow statement. These breakdowns allow you to measure the impact of business decisions, create accurate budgets, and cut unnecessary costs while aligning your organization with the guiding vision.
With the help of these financial statements, you can go a step further by conducting one of two types of analysis:
- Horizontal analysis – Compares financial information over several report periods with a selected base year as the starting point.
- Vertical analysis – Bolsters horizontal analysis by conducting a proportional analysis of your financial statements, with every line item being listed as a percentage of another line item.
What are the benefits of financial statement analysis? Ohio University’s School of Business explains them beautifully:
Financial statement analysis can benefit organizations in numerous ways. It provides internal and external stakeholders with the opportunity to make informed decisions regarding investing. Financial statement analysis also provides lending institutions with an unbiased view of a business’s financial health, which is helpful for making lending decisions.
#2 Develop and Define Goals and Objectives
If you are unsatisfied with your company’s current direction, then you have to course correct.
To accomplish this, you will need to develop and define operational goals on both a macro and micro level. Additionally, these pursuits have to be shared throughout the organization so that every teammate is aligned and working toward the same goal.
Setting vague goals will not be of any use to your organization. Instead, they need to be precise and quantifiable. An acronym you can remember is SMART:
- S (Specific) – When setting goals, ask yourself what exactly you wish to accomplish. This should answer all of the who, what, when, where, which, and why questions.
- M (Measurable) – Do you have metrics that you will use to gauge if you met your goal? Tangible goals need to be measurable. Otherwise, there is no way to map your progress.
- A (Achievable) – How important is the goal, and is it feasible? A goal should be something you can work toward and accomplish rather than a benchmark that feels impossible to cross over.
- T (Time-bound) – Goals need a deliverable target date. Carefully consider how long a goal may take to achieve, and set reasonable time constraints that create a sense of urgency without straining the operational components of the team.
#3 Consider Your KPIs
If you want to set attainable goals, you need to know your key performance indicators. KPIs are important business metrics that you can leverage to track, measure, and analyze your financial activities and overall performance.
Which KPIs you focus on depends on your industry and the business’ specific needs. That said, there are several types of KPIs you should at least be aware of, including:
- Financial performance metrics
- Gross profit margin
- Net profit margin
- Operating cash flow
- Working capital
- Quick, current, and debt-to equity ratios
- Consumer insights and marketing
- Customer acquisition cost
- Customer lifetime value
- Customer satisfaction index
- Customer retention
- Market growth rate
- Customer metrics
- Customer churn rate
- Dwell times on site
- Number of new vs. repeat site visits
- Percentage of customers who are very satisfied
- Contact volume by channel
- Supply chain and operational performance
- Order fulfillment cycle time
- Earned value
KPIs can help an entire organization react quickly to events that can have an impact on the business. They allow a company to set targets, reach strategic goals, and create a sense of shared purpose across the organization.
#4 Marketing Matters
Whether you run a mom-and-pop shop or a Fortune 500, there will always be a need for high-impact marketing. But for smaller organizations with budget constraints, strategic low-cost marketing can provide significant ROI. Done well, it dramatically improves the way your company reaches out to existing and potential leads.
What does a high-impact marketing campaign look like? Typically, it focuses on the following:
- Search Engine Optimization – A SEO strategy involves aligning your website and all of its content with search engine algorithms and customer’s likely questions.
- Content marketing – Your website and blog provide a fantastic opportunity to establish your authority, build a community, and drive SEO. A comprehensive content marketing strategy will include:
- White papers and eBooks
- Social media marketing – One of the most powerful marketing and customer relation tools at your disposal, there are several valuable channels you could potentially utilize, including:
- Paid ads – If you have a limited budget, PPC campaigns may be too expensive for your taste. However, a strategic campaign—especially with long-tail keywords—can significantly reduce your total customer acquisition costs.
#5 Consider Outsourcing
Specialization and economies of scale are how a small business can transform into a larger one.
In the early stages of a company, workers may have to wear several hats. But after a certain stage of growth, you will eventually need people on your team whose sole focus is on a specific role.
Fortunately, technology has made it possible for a decentralized workforce to hum on all cylinders. It gives companies access to extremely qualified specialists across a field of industries—from HR to PR to IT to finance.
For instance, consider your accounting team. While you may be able to manage the books early on, at some point, doing so will be a waste of your limited time and energy. And, as a company scales, managing the books and the financial regulations becomes an increasingly complicated endeavor.
As Laura Lee Sparks, founder of Legal Marketing Maven notes:
“Most entrepreneurs have great talents but many times they think they can do it all. That can really stall the growth of the business. By outsourcing the day-to-day back-office tasks, the business owner has more time to focus on generating income.”
CFO Hub—Outsourced Experts Dedicated to Improving Your Business Operations
Depending on your business and its operational needs, there are several ways you can make impactful improvements across your entire organization—whether it is marketing, financial statement analysis, goal setting, or outsourcing.
Do you need help improving your business operations?
At CFO Hub, we offer outsourced CFO and accounting solutions to growing companies like yours. From contracting out CFOs, controllers, and accountants, to providing financial consulting and reporting, we have experts you can trust to continually drive growth.
In the process, we can improve your business operations together.