Business Planning – Do You Know Your KPI’s
Business planning, a generic term. Doesn’t say too much on the surface. So why are you reading about business planning? You think your business is going okay. You are making good money and operations seem to be running smoothly. But, you feel operations could be better and profitability could be higher. So you look to do some business planning with forecasting and projections to try to identify areas that could be improved. But, do you know your KPI’s (Key Performance Indicators) and how well do you stack up against others in your industry? Are you strictly looking at the numbers and not performing a true assessment of your business from a general perspective, identifying the operational and administrative areas that YOU feel need improvement? This is what true business planning and business advisory services encompass.
Performing forecasts and projections are a key component to business planning and advisory services. But, to truly know how well the business is performing, you need to look at all the measurables, learn what they mean, what financial performance they measure and how you can improve the specific indicator. Also, you really need to know what the standard for each KPI is for your industry. There are a number of sources that provide all kinds of KPI standards for all types of businesses and industries. For example, http://www.investopedia.com/terms/k/kpi.asp .Once these are obtained, you can see how your business is performing. You may have unrealistic expectations for performance in your respective industry. For example, you can’t expect a 65% gross profit margin if the industry standard is 40% unless you have something unique to your operation. Also, we all tend to look at KPI’s relating to financial performance. However, there are a number of KPI’s for other areas of your business. For example: inventory turnover, days in accounts receivable, average hourly return for all employees and many more. Improving some of these KPI’s can result in better financial performance and cash flow.
As mentioned above, one of the first steps in business planning is to take a general overview of your business. What we at Joseph F. Fragnoli, CPA, PC in Nashville, TN call a TRUST Assessment. It is a questionnaire asking a number of questions about how YOU feel the business is performing and where YOU see a need for improvement. The assessment doesn’t ask for financial information. It is more about the general perception of the business. It is an excellent lead into where to begin to analyze your operation and where to focus in the beginning. Then as we breakdown the business and dig deeper into operations and systems we are able to develop a true business plan and systems to make your business operate the way YOU want it to operate. As you can see, we focus on YOU. It is your business and no one should be telling you how or the way your business should be run. Our objective is to get the business to run the way YOU want it to run and how you see the perfect business.
If you are interested in having a no obligation and no cost TRUST Assessment performed, click on the tab on the website and complete the information. A link will be sent to you within 24 hours so you can begin the assessment. It only takes about thirty minutes or so to complete. Once completed we will schedule an appointment to meet with you to go over the 20 plus page report, again at no cost or obligation. We do this because we believe that once you do the assessment questionnaire and meet with us you will see the value in what we do and how we can help make your business be more like what you envision as the perfect business. Our objective is to be a profit center, making you way more money than we cost you.
If you have any questions, please feel free to call us at (615) 678-4751. Also, we serve all over the Country working with Skype, traveling to do face to face meetings or whatever suits the client. So, you don’t have to be in the Nashville area to receive our services. We have clients from California to New York and even out of the Country.