Key Performance Indicators: A critical measure of business success
What are the lead performance indicators in your business? Do you know how to measure if you are on track or off track?
Measuring key performance indicators in your business will help you understand what you are doing well and what you can improve on. This is essential to achieving business growth.
In this video, O’Brien’s Principal Chris Mullins, shares one critical indicator that we use in our business to measure how we are tracking each month.
Please contact us if you would like support in identifying the key performance indicators in your business and how to understand them.
Hi, I’m back. After the traumatic experience of my children seeing me on YouTube doing these videos. I’m back to do another one in the hope that it’ll encourage less screen time.
Today I want to talk about key performance indicators. So, yes, whilst we have our traditional accounting reports, which is our profit and loss and our balance sheet, and specifically our profit and loss, and looking at the way we compare actual performance to budget performance, which we spoke about in previous videos. Today I want to talk about, what are the lead performance indicators in your business that are going to know whether you are on track or off track?
In our business, we really focus on gross profit margin. It measures and tracks the efficiency of how well we manage our labor. Our labor can make up to 60% of our overall costs, and it is absolutely imperative that we stay on track and monitor this regularly. We look at it and measure it monthly, and we know if we’re on track what we’re doing well, and if we’re off track, what we need to do better.
But what about your business? What are the key performance indicators in your business? You might be a capital intensive business whereby you want to know more about what are your return on your assets. Or you might be, for example, a real estate business where it might be just simply knowing about, well, what are my listings for the month and how is that growing year on year?
Each business will have its own specific performance indicators and understanding what they are and monitoring and measuring them on a monthly basis is crucial to know whether you’re on track or off track. If you want help to understand what are the key performance indicators in your business, we are here to help. My name’s Chris Mullins from O’Brien Accountants & Advisors. Please give me a call. Thank you.