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Measuring Performance to Achieve Success

18/08/2008


There is a rare breed of individuals in the business world who are determined to manage and own a profitable enterprise. With that goal in mind, they seek out an under-served market or some other wonderful opportunity as a vehicle to achieve their goal. These people are the entrepreneurs of the world, and the type of business they choose is secondary to this end goal.

More commonly, we see small to medium sized business owners who find themselves running their own business almost by accident. These individuals are highly skilled at their particular trade – it may be making award-winning wine or growing high quality grapes. As a result of their skill, their business grows around them, and suddenly they find themselves wearing many hats: COO, CEO, CFO, Human Resources Manager, etc.

Along with these new responsibilities comes that nagging feeling, which appears when we are out of our comfort zone. Do I really understand my business? Am I focusing on the things I need to be focusing on? Or am I simply in survival mode, reacting to issues and problems when the fires are already burning?

The numbers are sobering, Industry Canada’s January 2008 Key Small Business Statistics report that only 50% of Canadian small businesses survive more than three years. Numerous studies consistently suggest that lack of management skills is a leading factor in business mortality.

How can you improve the odds for your winery?
Stop waiting for your accountant to tell you how your business performed six months after your year end when you review your financial statements. Such information may be useful in determining whether you met certain financial targets, but it is simply a measurement of past outcomes. It’s like the doctor arriving the next day just in time to pronounce the patient dead.

Instead, you need a system that will monitor the health of your winery in real time and give you the opportunity to influence outcomes. Ideally, this system would cut through all the extraneous information spinning out of your business and focus on the vital signs, the critical drivers of your winery’s success.

In today’s business world, these systems are called business dashboards or management flash reports and the process behind them is performance measurement. Such tools are not just for large national or multi-national corporations. In order for owner/managers to beat that nagging “out of control” feeling it’s necessary to manage those few activities and processes that have been identified as fundamental to the success of their business.

Here is an overview of the process:

1. “Where do you want to be in five years?”. Define your vision, values and goals.

2. Evaluate the status quo – “where are we now?”. Focus on customers, operations, finances and people. Remember to consider an exit strategy.

3. To get from 2 to 1, what do we need to focus on? In order to achieve our vision, what 4 to 6 factors do we need to get absolutely right?

4. Determine the activities (the people and processes within your winery) that drive the factors identified in step 3.

5. Identify measures to monitor the activities identified in step 4.

6. Implement a business dashboard to report the measures identified in step 5 in real time.

7. Use this information to reward your people for performing the activities that drive your success factors. Your employees will start acting like business owners because they now have a personal stake in the success of the winery.

Working through a process such as this will not only keep your business healthy, but it will allow you to focus on those elements of your business that you enjoy the most.

Geoff McIntyre, CA works with Meyers Norris Penny in Kelowna.