The new year is right around the corner, and that means it is time to review the last year and make changes for the months ahead. This process will likely include myriad systems and processes. Does it include your KPIs?
Have you updated your top KPIs list recently? What are you measuring? Sometimes the KPIs on your dashboard made sense a year ago, but have things changed enough that a revamp is required? Are you still keeping track of metrics you think are important when there are others that may be more relevant? The new year is the perfect excuse to evaluate.
Here are our top KPIs. If they aren’t already on your dashboard, consider adding them for 2018.
Gross Profit Margin
Are you pricing your goods or services appropriately? Since these are your bread and butter, you need to know if they’re sitting in the right position price-wise. Your gross profit margin should be large enough to cover your fixed (operating) expenses and leave you with a profit at the end of the day.
We’re sure that this is already on your list, but if it isn’t it needs to be. In order to make valuable alterations to your processes, you need to know what your bottom line is. While it’s often the most frustrating for CFOs, it’s none the less critical, especially when investors are involved.
Not only is it important to know how much money your company is bringing in, it’s just as important to understand if that money will be enough to cover your current debts. If it is, your business is performing well financially. However, if the ratio is too low, the chances of paying all debts at once would be unlikely.
Relative Market Share
How much of a given market is controlled by your business as a percentage? How do you stack up against the competition? The above numbers are great as far as finding out how you are doing in isolation, but those numbers don’t mean much if you’re falling behind your competitors. If you aren’t competing, you’re losing – it may be harsh, but it’s the truth.
At True Sky, we’re all about metrics – we believe you can’t make a profit without them. Our financial budgeting and forecasting software makes it easy to track what really matters. Call us today at 1 855 878 3759 or visit www.truesky.com for more information.