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Your Key Performance Indicators & How You Measure Business Success

Pillar 1 Your Key Numbers – What’s It All About?

Pillar 1 Your Key Numbers – What’s It All About?

Pillar 1 “Your Key Numbers”  is concerned with establishing where you are in your business, both now and at every stage through your improvement process.

Why Performance Measurement Is Important

In the performance measurement world there are two popular phrases which will help you think about this essential area which is not done well by many of the small businesses I encounter. [continue reading…]

in 1 – Your KPI

How To Measure Marketing Activities

Marketing is a critical activity for any business that is not in a monopoly supply position or operating in a marketing where demand overwhelms the ability to supply. But how can you measure marketing and know if it is working?

“Half the money I spend on advertising is wasted. The trouble is I don’t know which half” is a famous quote from John Wanamaker, a department store entrepreneur in the late 1800s and early 1900s.

One hundred years later, it’s still a sentiment that many business owners and senior managers can relate to.

The Two Types Of Marketing

I normally talk about the two types of marketing being the difference between search marketing and outreach marketing:

  • Search marketing – making sure your business is found when a customer or prospective customer is looking for suppliers.
  • Outreach marketing – reaching out to target potential customers to encourage them to take action to contact you before they begin searching more generally.

Today I want to refer to a different two types of marketing activities:

  • Brand building – promotional activities to increase the awareness of a brand name and (hopefully) the brand positioning, i.e. what the brand stands for and means.
  • Direct response marketing – actions taken to encourage a customer to make contact with you immediately.

There is some crossover since direct response advertising can also help to build brand awareness depending on the extent to which the business name and any slogan is emphasised in the promotions. [continue reading…]

in 1 – Your KPI, 4 – Lead Generation

Maximise Your Return On Time

It’s common practice to think about maximising your return on money invested and to have some kind of measure to track it but do you consider how to maximise your return on time?

The twin problems of:

  • Lack of time; and
  • Having too much to do;

are common issues for business owners and they can contribute to the business getting stuck in a rut. The business owner wants to move forward but seems unable to take the actions necessary.

This is why the thinking in the Stop Start More Less Matrix is important. It recognises that, to do something new or to do more of something good, you have to buy time from yourself.

Time is finite. No one has more than 24 hours in a day or 168 hours in a week.

Your task is to get the most out of the hours you choose to work in those 24 hours. In other words, your aim is to maximise your return on time. I first blogged about Return On Time in June 2009 while I was thinking about the importance of respecting the attention and time of your customers. [continue reading…]

in 1 – Your KPI, 2 – Your Inner Game

From time to time, a business owner will contact me and ask for a free Business SOS because their business has cash flow difficulties.

The first issue we face is the problem of diagnosis. A business may be experiencing cash flow problems for a number of different reasons and curing the problem for the long term means getting to the root cause.

Cash flow difficulties normally mean that the business is struggling:

  • To pay suppliers when they chase for their money after selling on credit, or
  • When another supplier insists on payment on order or delivery and no money means no goods, or
  • When the business owner is struggling to find the money to meet the weekly or monthly payroll, or
  • When  the business can’t meet a periodic payment like the quarterly rent or VAT, or
  • When the business owner wants to take money out of the business for personal use and the money isn’t there.

The Causes Of Cash Flow Problems

[continue reading…]

in 1 – Your KPI, Business Problems And Mistakes

This is a review of

“Genghis Khan Guide to Business” by Brian Charles John Warnes.

Who Should Read This Book

  1. Every qualified accountant without extensive business experience at finance director/controller/chief financial officer level.
  2. Every business owner and entrepreneur.
  3. Every managing director or chief executive who is responsible for the profit and cash performance of a business and who doesn’t have complete confidence in his or her finance director or CFO.

How I Was Introduced To The Book

After I passed the final exams to be a chartered accountant, I was given this book to read by one of the partners in my accountancy firm who had returned to the profession after working in industry for many years. I was told that I’d learn how finance really worked in the real world, away from all the fancy theories I’d learnt to for the exams. [continue reading…]

in 1 – Your KPI, Best Business Books

How To Reduce Fixed Costs

If you want to improve the profit performance of your business, break even point analysis suggests that there are three main ways:

  • To increase sales volumes
  • To increase contribution rates
  • To reduce fixed costs

Actions taken by turnaround consultants and business recovery experts suggest that in many cases, the fastest acting of these initiatives is to reduce fixed costs.

What Are Fixed Costs?

First a reminder of definitions.

Fixed costs are fixed in relation to volume over a normal level of business. [continue reading…]

in 1 – Your KPI

How To Reduce The Break Even Point Of A Business

I am a big believer in using break even point analysis in helping a business to improve its financial performance.

In this article I will explain how a business can reduce the break even point so that it makes a profit at a lower level of sales value or sales volume.

It does not look at ways to increase the sales volume or value so that it moves from the bad side of the break even point to the good side.

You will find help on increasing sales in three other sections of my blog:

>>> Generating More Leads

>>> Improving Lead Conversion

>>> Selling More To Customers More Often

Do You Understand The Break Even Concept? [continue reading…]

in 1 – Your KPI

Today I will look at why it is a good idea to reduce the break even point in a business and in a couple of days time I will explain how to do it.

What Is The Break Even Point?

The Break Even Point for a business is the sales volume or sales value where the business neither makes a profit or a loss but is said to break even.

I looked in detail at the break even point concept (BEP) and break even analysis in this article:

>>> Cost Volume Profit Analysis

and explained how it can be calculated in this one:

>>> How To Calculate The Break Even Point Of A Business

Calculating The Break Even Point In An Owner-Managed Business [continue reading…]

in 1 – Your KPI

How To Develop KPI

If KPI are important and the name:

  • Key
  • Performance
  • Indicators

gives the game away, it begs the question, how do you develop KPI?

What Erica Olsen Has To Say

I thought this was a nice, short introduction video on how to develop KPI from a strategic perspective.

[continue reading…]

in 1 – Your KPI

What Are Key Performance Indicators Or KPI?

There is a lot of talk about key performance indicators or KPI for short but what does the phrase really mean?

What Are KPI?

Wikipedia start with this definition:

“A performance indicator or key performance indicator (KPI) is a type of performance measurement.”

I think you knew that didn’t you. It’s an unhelpful definition.

We can do better than that.

Webopedia (link now forbidden) says

“KPIs, or key performance indicators help organizations achieve organizational goals through the definition and measurement of progress.”

In his blog article, Rob Petersen quotes twelve experts on their definitions.

These are the two that I like best are: [continue reading…]

in 1 – Your KPI