Most businesses produce year end information but this is based on historical information which is often out of date by the time it is produced and tells you nothing about what is happening right now.
To make good decisions the business owner needs more up to date information, a measure of how the business is performing right now.
What you can…
It is important to know what to measure to give you the confirmation that everything is running smoothly or if not what you need to be focusing your attention on.
What should you measure?
But remember …
- For many businesses cash is king!
- But you must also improve profits
But profits are a consequence
- So you must focus on sales
- And focus on costs
But the most critical drivers are not found in accounts or projections you may need a different type of plan for these
You must identify your key underlying success driver
- We want Profit/growth key results
- A function of key sales drivers
- And key cost drivers
- Aided by key cash drivers
- Driven by key underlying drivers
Some suggestions for each area that you might consider are as follows:
- Sales revenue
- Market share
- Hours worked
Key cost drivers
- Overheads per head/hour/square foot
- Marketing costs per sales lead
- Product reliability
Key cash drivers
- Debtor days
- Creditor days
- The number of times stock is turned over a year
Key sales drivers
- The number of customers
- The average sales value
- The number of times they purchase
- The number of sales calls
- The number of referrals received
- The turnaround time of a job
- The number of leads received/generated
- Conversions rate
Key underlying success drivers
- Customer delight
- Team Happiness
- Innovation and creativity
- Investment in knowledge and other assets
- Operational effectiveness
All of these key areas can be reported in a know your numbers plan which is a short document focusing on just these areas and can be used with your team each month to see how the underlying areas of the business are performing.
If you would like more information about these plans please contact us on 0161 723 3211 or use the contact form at www.wildsca.com
Keep an eye out for our benefits blog coming out next week!