Everybody?s got ?books?, but how is your business performing?
I don?t care what the size is. Every small business owner needs to have a measurement tool and be consistently measured against that tool.
And that is where Key Performance Indicators or KPI?s come into play.
It?s one thing to know what your sales are. That?s the easiest measure, but don?t you want to at least go one step up from your competition? How about knowing what your gross profit margin is ( Take your sales minus your direct costs of doing sales and that gives you gross profit. Gross Profit divided by Sales is your gross profit margin)
Every business owner, at a minimum, should know their gross profit margin. Without knowing this, how can you predict, with certainty, how much money you could make if your sales increased by X dollars?
Now let?s get a little more complicated?Do you know what your breakeven sales are? That?s great if you can figure that out for today, but what was it last year at this time? Do you know that?? Great, your breakeven sales went down from last year. Why did that happen? What?s changed in your business? Is this something we can capitalize on going on forward.
If you?re a service business, how many employees do you have? Do you know what your average sales are per employee. or perhaps per? foreman.
Can you see where I?m going with this? Everyone else is? just talking about keeping track of your dollars, not about being able to manipulate those dollars so that a small business owner can be that much more confident about where they are today, and have the certainty about where their business is going tomorrow.
Start measuring your performance today! I?d love the opportunity to talk with you further about helping you figure out your own business financial confidence.
Presented by Steven A Feinberg, CPA of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in tax, payroll and business planning for his clients throughout the year. Steve is a recognized member-contributor of the book, Six Steps to Small Business Success. For additional information, you are encouraged to email Steve at [email?protected] or call (603) 434-2775.
Steven A. Feinberg ? www.AppletreeBusiness.com ? Get Appletree Blog via Email ? Follow CPAsteve on Twitter
Filed under: Uncategorized Tagged: | bookkeeping, Business, business plan, Key Performance Indicator, KPI, New Hampshire, Small Business
Source: http://blog.appletreebusiness.com/2013/03/19/kpis-whats-that/
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