So, the business is growing, sometimes out of control and you wonder what’s important to measure to make sure you don’t take your eye off the ball. On average, I find that the majority of small business owners measure the balance of their bank account, plus debtors and creditors due. Then, they hit the panic button. It can feel like if your customers don’t pay you, you will struggle to pay the bills yourself. Well, to be more effective in your business and to be more measured and strategic, you also need to consider the number of live opportunities you have on your plate and new opportunities over the current month that you are expecting to generate,
Then, we have many other indicators to consider:
- Financial forecast for the month and beyond,
- Conversion Rate to sale
- Average $ Sales
- Number of Transactions in a year for your repeat customers
- Profit Margins (GM% and NP%)
- Revenue per full time equivalent team member
- In most businesses, record labour efficiencies
- If you have sales people, they should have targets, incentives and actual variance reporting
- Always have a budget for your business, prepared prior to the financial year commencing
Above all, have the discipline to do this no less than once a month.
If you need assistance in setting up those requirements to run a very successful small business, please give me a call.