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Focus on key business drivers for your business to succeed

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If an organisation is to meet its mission it should concentrate on its key business drivers. A key business driver is something that has a major impact on the performance of your business.
It is therefore very critical to identify and monitor these key drivers if one has to boost the profitability of his business.
There will be a number of both internal and external factors that will affect the performance of every business. However the secret is to focus on a few key drivers that will have a huge impact on the performance of the business once they are acted upon.

Businesses must perform the activities associated with key business drivers at the highest possible level in order to achieve their intended objectives and achieve competitive advantage.
To track the achievement of the key business drivers, an organisation should develop key performance indicators (KPIs) that will help to measure the key drivers.
By focussing on key business drivers and tracking their achievement through use of KPIs a business will be able to achieve its strategic objectives and therefore its mission.
An organisation should therefore develop an effective performance measurement system that enables managers to evaluate and measure the organisation’s performance.
To be effective, the measurement system should align the organisation’s objective with individual managers’ objectives.

Managers’ objectives should cascade from the corporate goals. In this way the achievement of the managers’ goals results in the achievement of the organisation’s goals.
The performance measurement system should also be linked to the company’s compensation plan and career development plan to provide reward and establish training and skills development needs.

Brian Tracy said that “The true measure of the value of any leader and manager is performance.”
We can evaluate the leader/manager through the use of the key performance indicators. KPIs are used by a company or an industry to gauge or compare performance in terms of meeting its strategic and operational goals. KPIs vary between companies and industries, depending on their priorities or performance criteria.

A good KPI should be quantifiable, it should motivate a manager to perform well and provide an incentive to a manager to make decisions which are in the best interests of the overall company and should only include factors for which the manager can be held accountable; those he can control. A good KPI should take into account both the long-term objectives as well as short-term objectives of the organisation.

It’s very crucial that KPIs are tailored to an organisation’s specific circumstances and objectives. They should be linked to the key goals of an organisation.
As from above it is very clear that a company’s KPIs should focus on key business drivers; those areas that determine the overall success of the business. These areas are the ones that add value to customer satisfaction.

Previously, performance measurements were mainly financial.
However in recent years, the trend in performance measurement has been towards a broader view of performance, covering both financial and non-financial indicators.
The key financial indicators are those measuring financial risk or the gearing of the business, or those measuring business risk, profitability and liquidity as explained below.
Financial risk is measured by the financial leverage ratio which is calculated by dividing debt with total capital employed (shareholder’s equity plus debt). This ratio refers to the degree a business uses borrowed money and how it is exposed to risks resulting from having too much debt.

Business risk is measured by the operating leverage ratio which is the total contribution (i.e. sales minus cost of goods sold and other variable costs) divided by fixed costs. This ratio shows whether a business is generating enough revenue to pay for its fixed costs and cover a return for the owners.
The main profitability ratios are the gross margin, the net operating margin and the return on capital employed. All these ratios look at how profitable a business is.
Liquidity is measured by the current ratio and the quick or acid ratio. These two ratios, current ratio and acid ratio, tell us whether or not the company has enough liquid assets to pay its liabilities for the coming year.

As a business grows it also employs more people. Some of the financial indicators can therefore be related to employees.
The most commonly-used measures are sales per employee, contribution per employee and profit per employee.
These measures can flag up issues that might need attention.

The weakness of the above financial ratios is that they are mainly historical and don’t help us in assessing the future viability of a business.
It is therefore important that a company monitors its performance on business drivers which are mostly non-financial and then select appropriate KPIs to assess the future success of an organisation.

The non-financial KPIs should be tailored to the mission of each organisation. The critical area to start measuring is customers. You need to see your business through your customers’ eyes.
Acquiring and retaining customers is a crucial task for every business.
If customer service is a strategic priority for your business, which it should be, it could be measured by sales data indicating customer buying preferences, what customers are buying, the number of customer complaints received, the number of items returned or by the time it takes to fulfil an order.

Most customer focused KPIs measure quality and customer service. In the banking sector, for instance, success will be determined by how a bank deals with its customers.
With the advent of technology and its easy accessibility bank customers are now looking for digital interactions that are simple, appealing and highly personalized and that ensure that service is quick.
Providing amazing customer experience is one of the key drivers and has become one of the decisive competitive differentiator between banks.
It will therefore be very crucial to monitor this business driver so that the bank is ahead of the pack in customer service. Closely aligned to great customer experience another key business driver is digital innovation.

Advances in digital technology are offering a number of channels for customer interaction like online and mobile banking. These channels have already changed how customers engage with the bank.
Tracking how customers interact with the bank through these channels will enable assessment of performance through this key driver.
Performance is useful as long as you compare the organisation’s performance against a certain yardstick. Usually organisations look at the trend of the KPIs over a number of years or benchmarking the business performance and potential with other businesses in the same sector.

If your business is targeting rapid and significant growth it may then choose to compare its performance with an established market leader.
The critical thing when benchmarking is to focus on the key drivers that drive business success in your particular sector.

About the author:
Stewart Jakarasi is a business and financial strategist and a lecturer in business strategy (ACCA P3), advanced performance management (P5) and entrepreneurship. He is the Managing Consultant of Shekina Consulting (Pty) Ltd and provides advisory and guidance on leadership, strategy and execution, corporate governance, preparation of business plans, tender documents and on how to build and sustain high-performing organisations. For assistance in implementing some of the concepts discussed in these articles please contact him on the following contacts: sjakarasi@gmail.com, call on +266 62110062 or WhatsApp +266 58881062 .

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World Bank pledges M2.1 billion to Lesotho

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MASERU – THE World Bank has pledged US$120 million (about M2.1 billion) for new projects in Lesotho for the coming year.

This revelation was made by the Minister of Foreign Affairs Lejone Mpotjoane at a press conference in Maseru yesterday.

Mpotjoane said the World Bank will visit Lesotho in January to look into the issues of project management, public financial management, government accountability, contracts management and procurement management.

“The World Bank raised a concern that the implementation of the projects is slow and in most cases behind schedule,” Mpotjoane said.

This came after Lesotho’s delegation led by Prime Minister Sam Matekane attended the US-Africa leaders’ summit in Washington in the United States last week.

Mpotjoane said the Summit was held to discuss how heads of government, officials, business leaders, and civil society could strengthen ties between the US and
Africa.

“One of the important issues discussed at the summit included good governance, democracy, human rights and rule of law,” he said.

The summit also discussed mitigating the impact of Covid-19 and future pandemics and strengthening regional and global health, promoting food security, advancing peace and security, responding to the climate crisis and amplifying diasporaties.

Mpotjoane said the United States also pledged at least US$55 billion (about M935 billion) to Africa over the next three years, spanning across a range of diverse sectors.

“The US further pledged to lend up to US$21 million (about M493 million) through the International Monetary Fund (IMF) for low and middle-income African countries,” Mpotjoane said.

He said the US Trade Representative signed a Memorandum of Understanding (MoU) with the African Continental Free Trade Area (AfCFTA) Secretariat to support institutions to accelerate sustainable economic growth across Africa.

He said Matekane also met the Chief Executive Officer of the American Peace Corps, Thomas Peng.

He said the US had suspended its Peace Corps operations in Lesotho due to the Covid-19 pandemic.

And after the meeting, the Peace Corps has undertaken to send over 50 volunteers to Lesotho.

Mpotjoane said Matekane also met the World Bank Group Vice-President, Victoral Kwakwa.

He said during the meeting, Matekane and his delegation stressed the commitment of Lesotho to work with both the World Bank and IMF institutions as key bilateral and multilateral partners to get Lesotho on a sustainable broad-based and inclusive growth path.

He said Matekane also met the Chair of the Senate Finance Committee, Senator Ron Wyden.

He said Matekane met the Chair of the Africa Sub-Committee, Senator Van Hollen, who was impressed to consider an extension of the Africa Growth Opportunity Act (AGOA) beyond 2025.

“The extension of AGOA will secure and create thousands of jobs in the manufacturing sector,” Mpotjoane said.

Matekane last Saturday tweeted that the secretary general of AFCFTA fully supports and wants to be part of developmental activity for Africa.

“Lesotho delegation led by myself met with his team and discussed assistance of AFCFTA in some of Lesotho government’s development activity,” Matekane said.

Nkheli Liphoto

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Early Christmas for MMB clients

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MASERU – CHRISTMAS came early for two of Maluti Mountain Brewery (MMB)’s clients after they walked away with Nissan NP200 vehicles for promoting excellence in sales in their businesses.

The prize-giving ceremony was held in Maseru on Tuesday.

The MMB further distributed M1.5 million to its clients this year in a bid to increase its sales.

The winners of the two Nissan NP200 cars are Katleho Khuto, a tavern owner from Mohale’s Hoek, and Libe Mapane, an owner of an off-sales, who won in the gold category.

The silver category winner is ’Nokoane Rankhasa who runs an off-sales while in the bronze category the winner is Letšoala Letšoala, also running an off-sales.

Khuto said this was the first time he had participated in the competition.

He said he had been working hard to perform well in business.

“I am not only selling to clients in the tavern but I also deliver the stock to my clients,” he said.

He said this kind of business has the potential to grow.

“It just requires good capital and good customer service,” he said.

Khuto said the prize money will help him to stock his tavern.

“I have been hiring people’s cars. Therefore, this will help to minimize my costs,” he said.

The MMB Sales Manager, Pusetso Thoala, said this programme started last year.

He said due to the Covid-19 pandemic many businesses collapsed and they want to help them recover.

Thoala said due to Covid, they saw it befitting to include all kinds of businesses in this sector.

Then they decided to include taverns and shebeens in the competition since they take a bigger fraction in the industry.

Thoala said the competition seeks to motivate businesses in this sector to work hard.

He said if businesses work hard, this will increase more sales hence improving MMB operations.

“We are seeking to reach even the districts,” he said.

Last year MMB put aside M2.4 million for this competition with 800 business owners participating in the programme.

A staggering M793 000 was awarded to customers who exceeded targets.

“We are offering two cars this year,” he said.

Thoala said this year they will focus on helping a higher number of business owners with renovation projects.

Thoala said they have three categories being gold, silver and bronze where in the category of gold, they will be offering a Nissan MP200 car model.

MMB believes this will motivate business owners to increase their sales.

Thoala said this is not only benefiting MMB but also business owners due to increased profits.

A Mohale’s Hoek businessman who did not want to be mentioned said the competition was fair.

He said this kind of celebration should not only be about collecting the prizes but it should be used for networking between stakeholders as well.

He said he was expecting the business owners to be given a slot to discuss their challenges and strengths so that the sector could grow.

Refiloe Mpobole

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Sweets that clear your sore throat

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ROMA – WHEN you have a sore throat, maybe due to common cold, you allow these candies to melt in your mouth.

They are not just sweet, they are also soothing.

“That’s because we’ve got measured amounts of wild mint, honey and lemon in there,” said Joalane Mohale who produces these sweets at the National University of Lesotho (NUL) Innovation Hub.

With these sweets, you clear your sore throat, fever and a cough.

The story starts in 2019 — in fact it starts earlier than that.

“That’s when my teammates and I were busy making and selling packaged teas out of various medicinal plants,” Mohale said.

Business was good.

People just loved their teas.

It is not surprising because the tea itself came in all kinds of versions.

The ingredients ranged from corn silk, to olives and mint, from Artemisia (lengana), to eucalyptus (boleikomo) and numerous other plants.

So people would come from all walks of life to tell them how the catalogue of teas they took to the markets was helping them.

One would say they assist with a headache, another would cite period pains, another would mention fever, flu, sore throats, all kinds of ailments.

It was something worth celebrating, with one exception.

These people were almost always adults.

There were simply no youths and children in the audience.

It dawned on Mohale that perhaps their products were not reaching the broader market.

What would they do?

“When we sat down and thought hard about it, we came to a conclusion that the way we delivered these soothing plants were simply not in the interest of the young.”

You hardly ever see young people sitting down and enjoying a cup of tea.

But we all know that they delight in munching sweets of all kinds.

So what if they used the same stuff they were putting in tea in the sweets?

It could be a brilliant idea.

So she started.

That was back in 2019.

The making of sweets might sound easy.

After all sweets are sweets, isn’t it?

She would soon learn what other seasoned manufacturers of anything have learned before her.

That manufacturing, no matter what it is you are manufacturing, is hard.

One experienced manufacturer likes to say “what people don’t seem to understand is that manufacturing is not so much about the product as it is about the process of making that product”.

The process, that’s the hard part.

But she tried it any way.

“I kept failing until I decided it was time to consult someone who was already in the business.”

The person consulted was ready to assist.

She opened up about what sweets really were.

She talked about different kinds of sweets and how each kind differed from another.

She told her that only certain kinds of sweets would be suitable for the kind of stuff she wanted to do.

She got back encouraged to try.

“You won’t believe it,” she said.

“Even with all that information, it would take another four months for me to be able to nail the sweets to my satisfaction.”

In the beginning, the sweets just collapsed a few days after being put together.

When she fixed that, then came another problem.

The sweets just went bad every two weeks or so.

She kept her experiments alive until she was able to solve the problems.

“One of the things I realised was the importance of accuracy,” she said.

“You have to be extremely accurate with measurements.”

You get a small thing wrong, the whole system collapses.

Among the ingredients in the sweets is a wild mint.

Basotho are known to have depended on wild mint to fight cold since time immemorial.

“Many would put it in their nostrils in times of flu or other stuff and it was celebrated for its effectiveness.”

Scientists have noted that mints can soothe upset stomach and ease colds, flu, fever, headaches, and sinus congestion.

Another candidate is honey—that magic food.

A CNN report says “researchers said honey was (found to be) more effective in relieving the symptoms of cold and flu-like illnesses than the usual commercial remedies”.

As if that was not enough already, she added lemon.

Listen to what some scientists have to say about lemon: “Lemons are rich in vitamin C and flavonoids that work together against flu and cold infections”.

Well, with the three in one, you are ready to munch your way out of most annoying flus and colds.

Good luck!

Own Correspondent

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