It is the way we live our lives – we continuously inform ourselves with all the events and developments that mean something to us. Trends are important indicators not only for the present but also for the future. By following trends it is simple to see and understand what is coming up next and what makes sense.
By definition trends are tendencies and directions. A new trend changes the directions, conditions and events in a certain field of interest. If we follow this particular trend we may be able to learn a lot about the development and anticipate future developments.
The same is true for your business.
By monitoring trends you are able to:
- reveal sudden changes
- identify new directions
- understand hidden developments
- learn about new types of events
- predict future developments
By continuously tracking important KPIs and metrics in your business your management will improve and you’ll be able to better understand your business, make better decisions and take the appropriate plans of action in order to improve your business on an ongoing basis.
The question is what are the important and critical factors in your business which should be monitored. While there is no specific answer to this question because it all depends on your business, industry and company, there are certain approaches you can take to better plan your monitoring and business reporting.
There are 3 areas within your business which are important to be monitored:
1. Trends in financial performance
By monitoring trends in financial KPIs, ratios and metrics like cash flow, accounts receivables, investments, financing, debt, etc. you are able to identify developments which are critical for the financial health of your business.
For examples of financial ratios, metrics and KPIs read this article.
2. Trends in marketing and sales performance
Tracking trends in your sales and marketing performance will predict your future financial performance. Ongoing reporting and analysis of the trends in your marketing tactics, sales approaches, campaigns, pricing, sales growth, etc. will reveal critical information for your business development now and in the future.
For examples of marketing performance KPIs and metrics read this article.
3. Trends in operating performance
Monitoring the critical trends in your operations will measure and analyze your productivity. KPIs like inventory metrics, supply chain metrics, employee productivity metrics, sales per employee, etc. will identify areas for improvement in your business operations and improve productivity which directly affects your bottom line.
As a starting point to develop a good and solid foundation for tracking and monitoring your key business drivers continuously you can use these 3 major areas in your business: financials, sales and marketing and operations.
Start by identifying at least 3 metrics in each of the 3 categories described above. What are the most important indicators for your financial performance, sales performance and operational performance?
One of the main benefits of having a continuous monitoring system for business reporting is the ability to identify important trends on time. This saves time and money both in short term and long term by acting on new issues and opportunities when it is required.