Financial understanding and how we can use benchmarking in our business is a real key area that we need to spend quality time on.
KPIs (key performance indicators) should measure the key areas in your business. They get a lot of bad press as some managers use them as a stick to beat people with. They should be used as a guide for self-improvement and trigger points to bring things back on track.
We need measurables in place from top, middle, and bottom of our business.
The first thing we need to do is a business plan and budget, of all our outgoings and income. Our gross margin and client base.
Cashflowand debtor days are the two things that can kill your business dead if you do not keep a close eye on them.
Sales and client base
And finally, activity to make all of this happen.
Numbers give us clarity. They cut through the noise and excuses.
Numbers create accountability and commitment.
Numbers will drive your business into a highly efficient and effective machine.
That said, they also scare people. Some people resist the hard truth. Especially when things are going wrong. When they have lost their grip on the general health of their business, the reality check does not always look that pretty especially when we have made a mistake and employed the wrong people and put them in the wrong seats.
So, lets isolate the three primary areas in the business and let me give you some ideas as to what GOOD LOOKS LIKE.
