Imagine having a tracking system designed for your business which keeps you informed of how your business is tracking at any point during the year??? Well…
How is your business Tracking?
…consider the following analogy…
When asked how man got to the moon in 1969 most people assume the spacecraft simply travelled in a straight line between the earth and the moon. The records show something entirely different, that flight was on course just 3% of the time. So 97% of the journey was spent off course and they still achieved their goal – how was that possible? Simple… ‘Check & Correct’.
That flight crew had to monitor every aspect you could think of; fuel, burners, equipment, oxygen, air temperature, travel speed, you name it – at every moment. So all they did was continually check and then correct to get back on course. The entire flight from take off to landing on the moon was spent checking and correcting to guarantee they achieved their goal.
How do you stay on course in your business? Failure to correct ‘wobbles’ in your business may not be as humorous as this….
So who is monitoring the key areas in your business?
In business the instruments, gauges and gadgets those astronauts were monitoring are called ‘Key Performance Indicators’ (KPI’s). The power of KPI’s comes from a simple concept – What you can measure you can manage.
KPI’s mean you know where you stand at any given moment and can adapt or change your strategy to improve your results right there and then. It’s like taking the pulse of your business. So instead of waiting for quarterly figures to discover your productivity was down or your marketing and sales process aren’t delivering – know day-by-day or month-by-month and adapt as you go. Knowledge is the power that drives better results.
What are your Key Performance Indicators?
They might be:
• number of customers per week/month/quarter
• average transaction value
• sales compared to capacity
• productivity compared to capacity
• number of items or services sold per customer.
Ideally your KPI’s need to be tailored to your business and should track those things that clearly tell you at a glance how your business is performing. Conversely if you’re not measuring your KPI’s how will you know if you’re on or off track at any given moment?
If you don’t know the answer to that question it’s unlikely you’ll achieve your goals. Think of it this way, if those astronauts were not checking their course KPI’s and making appropriate corrections, man wouldn’t have made it to the moon.
What are you failing to achieve because you’re not monitoring your KPI’s?
Make a list NOW, while you’re thinking things through.
Our staff specialise in helping businesses structure simple KPI platforms? Click Here and we’ll make available a free half hour consultation on KPI structures.
Team Tip: Rally your team during the month, discuss the RELEVANCE of KPI’s within your business, and how those KPI’s will help your team members and the business as a whole. Be organised, be in Control!!
In boom times it’s very easy for business owners to ignore the quality of their financial reporting system and turn a blind eye to financial management issues. Unfortunately when these bad habits spill over in to difficult economic times it can have catastrophic consequences.
The most basic requirement for a successful small business is good accounting records. Up to date, accurate financial records lets you make informed business decisions. They provide vital management information needed to grow your business and monitor key performance indicators.
Despite the introduction of GST some 8 years ago, the majority of small business owners are still using accounting software beyond their business needs and level of accounting skill. The net result is they generally produce ‘computerised shoebox’ records that should not be relied upon when making financial or strategic business decisions.
If you don’t understand double entry accounting principles including debits and credits, it is time to review your accounting software. As a rule of thumb, you should have financials available within 14 days of the end of each month. This is supported by an Australian survey that suggests that a business’ very survival depends largely on timely and accurate records.
You also need good accounting records to demonstrate your financial position to banks, other lenders and prospective buyers at some time in the future. These parties will want to track your historical performance and will demand current data. The Tax Office also requires you to keep and maintain business records including source documents for at least 5 years. In general you need to keep records of all transactions including accounts receivable, accounts payable payroll, petty cash and inventory. A word of warning, don’t get bogged in data and superfluous reports that are meaningless.
Well managed businesses produce a ‘weekly snapshot report’ of:
Remember, people go into business to maximise a particular skill or concept, such as building, plumbing, consulting, wholesale or retailing. Record keeping and business management are often not the primary skills of the business owner. In fact ‘numbers’ are not everyone’s strong point… as Ma & Pa Kettle demonstrate in this video clip….
An interesting clip……phew….glad it’s not you huh!!
NEWSFLASH…..
Did you know bookkeeping software exists in the market place which is:
- Extremely cheap
- Does NOT require you to enter transactions AT ALL
- BAS information is automatically available at the click of a button
- You can run simplified Profit Reports anytime you like!!
