What are my KPI’s?
Customer Acquisition Cost
Are you looking to grow your business? You need to look at the key numbers in your accounts to help you and to monitor your progress.
Do you know how much each customer costs you to win? This is one of the key performance indicators you need to know for your business. It looks to understand how effective you are in getting new customers and how much money you are making from the new customers when you actually get them? When you use this to look at the most cost-effective way to get new clients you will start to see that you spend your marketing budget much more effectively.
Operating Cash Flow
Cashflow is the difference between the money you get paid and the money you pay. Your business needs a positive cashflow to operate day to day. It is the most important KPI in your business, any short-term dip in sales can be more easily weathered if you are having a good positive cashflow. This KPI should be monitored as much as possible to understand the payments you are going to be making and also the money that you will be paid.
Accounts Receivable Days
The accounts receivable days are looking at how quickly you get paid for the work that you do. If you get paid sooner this money is there ready for you to pay bills and wages. If you have to wait a long time this will impact the profit that you make if you are relying on finance to make up the shortfall. Obviously, the goal is to get paid as soon as possible and to reduce the need to rely on external finance to be able to make your salary payments each month. This KPI needs to be monitored to make sure that you collect all your owed invoices on time.
Gross Profit Margin
You need to know what Gross Profit you are making, this is different from the Net Profit. It means that what profit are you making in your business with expenses that directly relate to doing the work for your clients. That is once you have paid the wages of the staff and any expenses that directly relate to doing the work, what is left?
Project Estimated Cost vs Actual Cost
Do you monitor the profitability of each project that you do? Do you know what profit you earn for each project and which of your projects and the clients are the most profitable? When you start to look at the KPI’s you will start to learn how you are performing as a business are you being effective when doing your work and how good you are at pricing the when you take on the work initially. How well did you do on the project and what can be learned on future projects to be more profitable.