Business owners seeking improvement will benefit by adding the following to business growth plans and strategies. Consider the impact of the numbers below on your product or service and your market.
The numbers to consider are those that guide you to the desired outcome of sustainability, profit, good cash-flow and business value improvement.
You need to know and set targets, to ensure you achieve improved profit, as well as sales growth.
If you want to sell or exit your business at some point, those doing due diligence will want to see numbers to substantiate your target price and see that good business financial controls and systems are in place.
If numbers are so important, the next question is, which numbers? Are these numbers in your typical financial reports, such as Profit and Loss and Balance Sheet?
These are ‘results’ based numbers. The numbers that are more interesting and arguably more useful are those that ‘drive’ the results. They are the ones that set the framework for business growth strategies.
They are commonly referred to as Key Performance Indicators (KPIs).
KPIs relate, not just to financial results, but to every aspect of a business as follows:
- Number of products/services sold
- Number of enhancements/upgrades
- Number of products added/deleted
- Number of quotes issued
- Number of jobs in progress
- Number of dollars spent on marketing
- Number of leads/enquiries generated
- Number of prospects in your pipeline
- ROI of marketing spend i.e. how much did each enquiry cost to create
- Number of website visits, social media followers, likes, tweets, re-tweets, blog posts etc.
- Number of leads generated from each marketing tactic e.g. open rate of email marketing messages and engagement with prospect
- Numbers of deals done as a result of enquiries or sales conversion rate
- Sales Growth Percentage
- Number of products produced
- Number of productive/unproductive labour hours
- Number of hours spent on rework
- Number of raw materials wasted
- Number of jobs finished on time
- Number of jobs without defects
- Number of jobs finished on budget
- Number of Work in Progress Days
- Number of Inventory Days
- Cost of Goods Percentage
- Overheads Percentage
- Number of Days Customers take to pay
- Number of bad debts
- Number of Days taken to pay Suppliers
- Staff Turnover
- Staff sick days
- Number of staff required to achieve growth
- Number of Contractors required to get work done
- Number of staff training events attended/hours
- Number of Work Health and Safety events
- Number of new customers
- Number of current customers
- Number of customers by class e.g. A,B and C class – focus attention on A’s
- Number of major clients visited
- Number of compliments
- Number of complaints
- Customer retention rate
- Number of referrals from customers
- Number of customer testimonials
Above are just some of the numbers you can use to drive efficiency and improvements in business. The challenge for you is to decide on a maximum of say ten of these (any more becomes too onerous).
Consider if you were away from your business for a while, what would be the say, six key numbers you need to be confident things are on track?
Focus on these numbers helps to drive a business in the right direction. Most of these numbers can be measured in good business systems. Once they are set up right and targets entered, you can manage by exception i.e. look only at those that fall outside the acceptable criteria.
If you have small business growth and development in mind, you simply cannot have your eye on every single transaction, so you need to find ways to be more efficient and effective in order to reach your goals.
Please DOWNLOAD a copy of our KPI’s EBOOK