Business Performance Apart from Profit

Although the business world is profit oriented, profits are not the only way or even the best way to measure business performance. There are many other elements to consider that may be even more important than profit.

Profit is a short sighted gauge of success. What is more important is sustainability. Sustainability is the characteristic of being able to exist indefinitely. This includes employees, availability of raw materials, machinery and other value-adding elements.

Rather than maintaining unsustainable processes in order to increase the profit margin, a company would be better off optimizing efficiency. Efficiency is the ratio of output to input. Input involves all of the resources that are exhausted in order to perform a business process. Output is measured by the quantity of products or number of job orders for a particular service.

In order for business processes to become more efficient, the manager must have the ability to effect change. This is not only a characteristic dependent on the manager but it reflects on the entire workforce. The ability to effect change can mean the difference between one batch of defective products and an entire shipment of them.

The manager must be aware of the risks involved in the changes that he puts into effect. Making changes to a business process always has pros and cons. The assessment of risks is part of being a manager. Risk is another element to consider when measuring business performance.

Lastly, customer satisfaction and corporate goals are two key performance indicators. These may seem like abstract elements but they largely impact a business in ways that are difficult to quantify like reputation and employee morale.