“How’s business Jock?” asked Paddy
“Last time I saw my accountant he said everyfink wis honky dory” replied Jock
“When was that, Jock?”
“Bout tree years ago Paddy, why do you ask”
“Because you can’t pay your bills and that new outfit across town is taking all your customers”
Know any businesses like this? Just asking for a friend of course!
You need to know where you stand financially EVERY MONTH don’t leave it up to your accountant – You are the one responsible.
This is where measurement comes in. Measuring will compare month to month, quarter to quarter and annually to date. More importantly measure your key performance indicators (KPI’s)
KPI’s are a valuable way to know you are increasing rather than decreasing business.
KPI’s will vary from industry to Industry but generally they would be:
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Profit or loss
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Gross profit & gross profit percentage (ideal - over 37%)
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Sales
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Average daily sales
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Debtor days (ideal - under 30)
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Number of new clients per month
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Visitors to your web site and web site statistics
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Overheads and cost of sales
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Adword interaction if you have them
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Quotes accepted versus quote rejected percentage
Set up a spread sheet - Excel will be your friend - and record your KPI’s month by month
Put in a column for last year’s monthly sales so you can compare.
Any decline in these figures will alert you immediately. If you can explain this – COVID lockdowns, staff illness etc all well and good, but if you can’t you are able to take immediate action.
Don’t be a Jock – measure, measure, measure |