EVENT RECAP: WHAT SHOULD YOU BE TRACKING? HOW MEASURING KEY PERFORMANCE INDICATORS CAN HELP YOUR BUSINESS THRIVE
KPIs, or key performance indicators, are important for any business to identify, understand and track.
Because those KPIs can be different by industry, we offered two separate webinars this summer that addressed the specific needs of business consultants and restaurant/bar owners.
Melanie Britton of Southport Consulting led these industry-specific webinars on August 10 and August 12. If you missed them, you can watch the webinar replays on our YouTube channel or read our recap below!
Melanie’s presentation answered the following questions:
What are KPIs?
Key performance indicators are measurements that help determine how your organization is performing. Whether they are company-wide or geared towards a specific department, KPIs are a critical part of managing your plan. Even if they aren’t directly related to your annual fiscal budget, they all play a factor in your short and long term goals. Every KPI should have a measure, target, a data source and reporting frequency.
How should I design my KPIs?
The company must have a strong strategy so they can understand what to track, and have the systems and tools in place to input the data. Staff buy-in is important, too. KPIs should be clearly defined, simple to understand, relevant now and in the future, and they should focus on improvement.
What strategies should I use to figure out what KPIs to track?
Begin by doing a deep dive into the financials to see where you stand. Then determine your long term and short-term goals. Figure out what data can be calculated now that will allow you to track future KPIs.
Which KPIs should I be tracking?
This will be unique to each industry. For business consultants, Melanie recommends tracking the following:
- Revenue – one of the biggest drivers of the annual financial budget
- Client diversification – adding services and/or markets to your core business
- Expense reduction – reducing non-project related expenses
- Utilization – the percentage of your staff’s time that is dedicated to billable, productive, internal and time off
- Effective rates – the actual hourly rate at both the client and project level
- Percentage of client & profit margin – influenced by both hours and hourly labor costs
Melanie recommended that restaurant and bar owners track:
- Sales – one of the biggest drivers of the annual financial budget
- Historical sales – shows the company’s performance over time
- Cost of goods sold – likely your largest expense
- Food cost percentage – the difference between what the business is spending on food and what the customer is spending
- Prime cost – how much it costs to operate the business using the two largest expenses: cost of goods sold and total labor costs
- Prime cost as a percentage of sales – an actionable metric that goes up as sales go up
- Employee turnover – a normal but disruptive part of owning a business
- Revenue per available seat hour – provides a better metric than average revenue per table
In each of the presentations, Melanie showed the group how to interpret their specific KPIs using charts and calculations. She then demonstrated how to use this information to plan your budget and annual financial goals.
Please visit Gerber’s YouTube channel to watch these webinars and many other events we have hosted.
We offer educational presentations and webinars all year long designed to help first-generation entrepreneurs succeed in business. To learn more about our upcoming events, please visit our website!