Get Clear on KPIs in Business
Reason #8 for Implementing Profit First in 2024 - Get Clear on KPIs in Your Business
What stats should I be tracking in my business? We hear this question often in conversations with business owners – whether they’ve just started out, taken over a family business, or have been in it for decades.
Some business owners find that they just aren’t comfortable talking about the “numbers” in their business. They are often super passionate about the work they do – providing high quality service or products to their clients and customers, but have some fear around facing the facts about trends, statistics and metrics in the business.
Do you find it hard to stay objective? Spiral often? Seeing progress seems impossible?
This is where Beyond Your Books shines – going beyond your bookkeeping needs to help your business succeed, year over year!
Here’s the thing: we have a thing for numbers! And details! If you, as a business owner, are easily overwhelmed by cash flow management, invoicing, AP/AR, payroll or tax prep – it is time to bring in help! Our team can help get things cleaned up; then, we can focus on the next phase: growth and sustainability!
BYB uses the Profit First method to help businesses obtain permanent profitability and eradicate entrepreneurial poverty. We also use our coaching methods with clients to help establish KPIs – Key Performance Indicators – to monitor over time in your business.
Through the process of implementing the Profit First method, the ins and outs of cash flow and profit margins become crystal clear. This helps us to set our sights on things we can control or manage.
Remember, the old way is Sales - Expenses = Profit. In this model, it is easy to chase Sales goals. Secondarily, you may keep expenses in check, but more likely they may ebb and flow with sales. Lastly, Profit is an afterthought – too far removed from the equation to feel like you can influence it.
Here’s the NEW way:
Sales - Profit = Expenses.
This way, we bring profit up to be an intentional part of the sales revenue – guaranteed, every dollar. The Profit First method designates a portion of every sale to go to “profit” – to save in the short term, and reward in the long term. This now allows for expenses to be more closely scrutinized, as we have to maintain and protect profit at all “costs.” At every stage in business we can justify more spending – but now is the time to defend and justify profit. When resources (cash) become more finite, it becomes even more important to see a true need for said expenses, and returns on your investments.
So, in this model – Sales matter. But so do your customers, how you acquire them, how long they are engaged, the types of offers you propose, the products or services you provide.
KPIs are metrics to track each one of these individual factors that culminate in the successful sales that push your business forward.
Are you focused on leading or lagging indicators? Meaning, are these metrics a direct result of your efforts, or an after effect?
In this KPI This or That – would you rather A) See positive progress or B) Always be spiraling out of control? Jumping from one fire to the next?
With strategic coaching we can help to align your business to grow and scale – and get out of the spiral of chaos.
These conversations happen during discovery — but more deeply they happen with our coaches, as you start to unwind the financial puzzle, simplify your methods of management and think “what’s next?”
If you are interested in having Beyond Your Books on your team – reach out to us! Mutual Discovery calls are always free for new clients.