Business drivers are the key inputs and activities that drive the operational and financial results of a business. Common examples of business drivers are salespeople, number of stores, website traffic, number and price of products sold, units of production, etc. In order to make internal choices about business strategy or build a financial model to value a company, it’s critical to gain a solid understanding of the main drivers of a business. Business drivers provide the foundation for identifying and developing the leadership capabilities that drive organizational success. A well-designed leadership competency model, built on these business drivers, ensures leadership development directly advances strategic priorities. By applying this structured approach, organizations can ensure that leadership development directly impacts business success.
Which business drivers to focus on
They are also dynamic in nature, meaning that they can change over time in response to external factors such as market trends or customer preferences. A Business Driver is a significant internal or external force that influences an organization’s strategic direction, decision-making processes, and operational priorities. These drivers represent the fundamental motivations and pressures that compel an organization to act, change, or transform in response to market conditions, competitive landscapes, or internal imperatives. Only by monitoring your key business drivers will you be able to make strategic decisions that will maximize your business’ performance.
What Are Business Drivers?
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Monitoring Key Business Drivers
When organizations align leadership capabilities with their most pressing business challenges, they create a clear, strategic path for leadership impact… Even direct competitors may use different drivers to improve their business performance. For example, prime location isn’t a key driver for an internet-based business selling computer parts. However, for a ‘bricks and mortar’ competitor that relies on foot traffic it would be. Identifying and monitoring the key drivers of your business is essential for generating profits and keeping your business sustainable.
Examples of Key Business Drivers
And If you want to increase your revenue, then look at factors impacting lead generation, pricing, product mix. A marketing campaign will be a kind of project targeted at these drivers. The business drivers you choose should help you move towards your business objectives.
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- These differentiate a product or service from those of a competitor and make them more appealing to consumers.
- This involves setting goals, allocating resources, establishing performance metrics, and monitoring progress to ensure that the business remains on track to achieve its objectives.
- This can involve analyzing financial statements, market research, customer feedback, and competitor analysis.
What are your key drivers?
A business driver plays a significant role in shaping the decision-making process within an organization, as it denotes the primary factors that contribute to the growth and success of a business. These crucial elements can include technological advancements, customer demand, competitive forces, and market trends, which may all have a direct or indirect impact on the company’s achievements. Key business drivers are resources and activities that drive the operational and financial performance of the business. Being able to identify and monitor your business’ key drivers is critical in growing your business, and keeping it sustainable and profitable.
Both roles require specific skills, expertise, and a commitment to achieving organizational goals. By understanding and leveraging the attributes of Business Driver and Driver, organizations can drive success and deliver value to their customers and stakeholders. Additionally, both Business Drivers and Drivers play a crucial role in achieving the goals and objectives of their organizations. Business Drivers help to guide strategic decision-making and resource allocation, while Drivers ensure the safe and efficient transportation of goods or passengers. Without effective Business Drivers, organizations may struggle to stay competitive and adapt to changing market conditions.
These differentiate a product or service from those of a competitor and make them more appealing to consumers. Our team closely follows industry shifts, new products, AI breakthroughs, technology trends, and funding announcements. Articles undergo thorough editing to ensure accuracy and clarity, reflecting DevX’s style and supporting entrepreneurs in the tech sphere. You should look at all three major financial statements, that is, your cash flows, sales reports and costs, and repeat the process for every line on the statements, finding out what drives each line.
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- Drivers also need to have good communication and customer service skills, especially when transporting passengers.
- They can also rank drivers by level of influence, which may help them find groups that slip through the cracks.
- The success factors of one business may directly account for the failures of another.
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For example, if you have identified employee morale as a driver, you could monitor it by tracking voluntary overtime, absenteeism and sick days. The drivers may change with time due to the growth of your business, changes in your market or simply seasonal changes. Like sales, your costs (and therefore profit margins) should ideally be tracked every week. Focus on the key variable costs (the cost of materials or inputs to business driver definition make products), and what causes them to increase or decrease.