Numbers to Build Your Business

Numbers to Build Your Business

How do you build your business?  Do it by the numbers. It may sound simple, but it’s hard work.   Use numbers to track how your business is performing.  They also help determine your future direction.

Every business has key performance indicators (KPI’s).  Some KPI’s apply to all businesses while others apply to specific types of businesses.

The KPI’s are metrics you can use to track different aspects of your business.   In the simplest form, owners look at their checkbooks, see that checks are not bouncing, and feel their business is doing well.  At the other extreme, automated systems can generate countless reports.  You can spend hours reading the reports .  Did you know that you can generate almost 200 reports in QuickBooks alone?   Only some of these are critical to driving the business.   Others are used to find mistakes or to generate helpful information for your staff.

The best option is to determine what numbers are important to drive your business.  For all businesses, Revenue, Cost of Sales, Overhead Cost, Outstanding Accounts Receivable, Income, and Short & Long Term Debt are musts, and should be reviewed monthly. These numbers speak to the overall stability of your business.  Beyond these, the KPI’s differ based upon the type of business.

Retail businesses should review numbers that will help in marketing, sales, inventory, and pricing.   These include: number of visitors, source of visitors, percentage that buy, number of items per sale, and dollar value per sale. Review these numbers regularly.  Compare them against prior months.   These numbers can help you increase profit, carefully direct advertising efforts, and boost sales.

Contractors benefit by reviewing the number of prospect contacts, source of prospects, number of proposals, number of proposals won, and cost of estimates vs. actual costs by project.  They can then adjust marketing, sales, estimating, and pricing as conditions warrant.

Service Providers should review the number of clients, source of clients, billable staff utilization and pay rates, and billing rates to make better decisions on marketing, sales, hiring, and pricing.

No matter what your business, conducting it by the numbers gives you the most insight which helps you build business and ultimately its value.

We can help you determine which KPI’s are appropriate for your business.  Monitoring your KPI’s helps you control and grow your business.   It takes time to find, select and implement the right systems to collect and report relevant KPI’s.  We have worked with clients to do this.  We have the experience to expedite this process for you.  For more information, contact us.