Step 1 – Decide what you want to achieve this year. Take your goals and plans and turn them into a forecast.
Step 2 – Measure how well you actually perform each month. Use a combination of traditional management accounting information and other key performance indicators, so that you are aware and on top of everything that matters within your business. Use this information to tweak and fine-tune your action plans and financial forecasts.
Step 3 – Measure your performance for the whole year by producing full financial accounts, thus ensuring you comply with statutory requirements.
Step 4 – Evaluate your performance by comparing it to that of previous years, so that the underlying trends are crystal clear.
Step 5 – Evaluate your performance by comparing it with the rest of your industry. How well are you doing compared to your competitors? Use benchmarking to identify your strengths and weaknesses.
Step 6 – Estimate how much your business is worth, so that you can assess how well you are creating value for the shareholders.
Step 7 – Calculate how much more profitable and valuable your business could be – use everything you have learned about your own performance and the performance of others to estimate how much more successful your business could be.
