Account Keeping Plus – Administration, Bookkeeping, Compliance News & Tips MYOB Reckon Quickbooks Xero Software TrainingSmall Business

Making Business Books and Accounting Come Alive! MYOB Reckon Xero

Cashflow Tips – A few KPIs can have a big impact on business growth management

Leave a comment


Cashflow Tips – A few KPIs can have a big impact on business growth management

Cashflow Tips – A few KPIs can have a big impact on business growth management

There are many things that take up the business owner’s time and no “one silver bullet” in order to have a big impact on business growth as we would all like – every business is unique – I see it as I visit businesses in the same industry. More often than not it is a few key things that together can have a big impact. The drivers of financial performance or personnel or production or operations are certain Key Performance Indicators (or KPI’s). If you don’t have KPIs you should consider a hand-full that you can track and measure to see what effect key decisions are having on your goal to improve and grow the business. It will depend on the industry generally:

Sales Company –  Volume of sales weekly/monthly, gross margin percent;

Manufacturer –  Machine hours weekly/monthly, labour $/machine hours, material margin percent;

Contractors –  Billable hours, rate per hour etc.

So key drivers can vary between industries, but if you were away from your business, what 5-6 things would you want to know about how your business is performing? That is, those that impact the bottom line.

To see what KPIs matter, scenario analysis can help sort out how much a KPI will affect the profit, and how much you need to improve the KPI to achieve a significant/desired rise in profit. It’s a sensitivity analysis.

An example – a business that generates $80,000 profit

Profit Sensitivity

This shows the biggest impact will come from number of hours sold – so that should receive the most attention first.

Many businesses know their sales and monitor their rise and fall, but you need to be more sophisticated than that. And set realistic targets – do SMART goals – specific, measurable, achievable, realistic, timely.

Next determine how you will achieve the new targets and get to it NOW!

Need help? Not sure? Call for FREE 30min advice / Strategy session today! Call 0407 361 596 Aust

 

Advertisements

Author: accountkeepingplus

Administration, bookkeeping and compliance for small business, and Self-Managed Super Funds (SMSF) Training, trouble-shooting, or we can do the books and payroll for you! Self Managed Superannuation Fund Service Provider, Free support MYOB Certified Consultant, Reckon/QuickBooks Professional Partner.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s