Everybody’s got ‘books’, but how is your business performing?
I don’t care what the size is. Every small business owner needs to have a measurement tool and be consistently measured against that tool.
And that is where Key Performance Indicators or KPI’s come into play.
It’s one thing to know what your sales are. That’s the easiest measure, but don’t you want to at least go one step up from your competition? How about knowing what your gross profit margin is ( Take your sales minus your direct costs of doing sales and that gives you gross profit. Gross Profit divided by Sales is your gross profit margin)
Every business owner, at a minimum, should know their gross profit margin. Without knowing this, how can you predict, with certainty, how much money you could make if your sales increased by X dollars?
Now let’s get a little more complicated…Do you know what your breakeven sales are? That’s great if you can figure that out for today, but what was it last year at this time? Do you know that? Great, your breakeven sales went down from last year. Why did that happen? What’s changed in your business? Is this something we can capitalize on going on forward.
If you’re a service business, how many employees do you have? Do you know what your average sales are per employee. or perhaps per foreman.
Can you see where I’m going with this? Everyone else is just talking about keeping track of your dollars, not about being able to manipulate those dollars so that a small business owner can be that much more confident about where they are today, and have the certainty about where their business is going tomorrow.
Start measuring your performance today! Do you know what a KPI is for your business? I’d love the opportunity to talk with you further about helping you figure out your own business financial confidence. If you want to learn more, look at Appletree Business Services’ Business Financial Confidence Map.
