Name: Dave Cain, CPA, Executive Vice President of Operations
Posts by Dave Cain, CPA, Executive Vice President of Operations:
- Customer Metrics: How many new customers have you acquired over the last six months? How many customers have you lost? What is the average profit margin for each customer?
- Cash Flow Metrics: These metrics should be designed to measure the company’s ability to meet obligations as they come due. For example: Is your inventory turning? How old are your accounts receivable?
- Sales Metrics: A company should have sales metrics to measure sales and whether the sales are satisfactory for the company.
- Employee Metrics: These metrics could be designed to measure how effectively the company is hiring and managing its employees.
- Borrowing Metrics: This metric will measure how the company is effectively managing its debt.
- You regularly bounce checks.
- You don’t have immediate access to financial information when your banker asks for it.
- Your budget and forecasting is lacking.
- As an owner, you have your hands in too many things to focus properly on your finances.
- You can’t answer the question, “How much money did you make yesterday?”
Did you ever notice that little sticker in the upper left-hand corner of your windshield? The one that informs you your next service date for changing the oil and tire rotation. As you fire up the ignition, the fuel gauge is activated and the miles per gallon information is displayed. The on-board computer lets you know that the headlights are in the automatic position and the tires are properly inflated. The navigation system may even provide a weather update or a construction delay on the interstate. Within a matter of seconds of entering your vehicle, you have virtually all of the important metrics for your upcoming road trip.
Your business metrics and performance indicators should be as easy as locating your vehicle’s metrics. The metrics need to be meaningful to you and your team and used as a decision making tool in the day-to-day operations of the business. Many business owners and managers use daily and quarterly metrics more frequently than the monthly financial statements to run the day to day operations.
Business Metrics To Consider
Your business’s on-board computer can churn metric after metric and ratio after ratio. However, the quality of the metrics is far more important than the quantity. One recommendation is to identify four to six ratios that are unique to your business and industry and continue to study the trends on a daily or weekly basis. As a general rule, every business should consider metrics in the following areas:
Once the metrics have been determined than a “windshield sticker” or dashboard can be affixed to your technology devices and reviewed by the management team on a regular basis. In addition, an industry scorecard can be developed to measure how the business compares to the industry.
Just like the oil in a car, the business metrics will need to be changed or enhanced on a regular basis to reflect changes in the economy and the business cycle.
Safe travels and be on the look-out for orange construction barrels and detours. Check your metrics!
Business Metrics Help
If you need help determine which business metrics are right for your business, contact Rea & Associates. Our team of Ohio business consultants can help you determine which business metrics are needed for the success and growth of your business.
Author: Dave Cain, CPA (Dublin office)
Are you out of breath from the impact the economy had on your business during the last several years? Is it time to develop some New Year’s resolutions that will make a difference in your business? Adopting a new diet, jumping on the treadmill or committing to run a half marathon are common items on the “personal” resolution menu. However, is it time to add energy and resources to your resolutions in order to improve the health of your business? Read the rest of this entry “
As a small business owner, you may have started your business because you have a passion for your particular business/industry or you may have had the desire to “take the plunge” and be your own boss. Income taxes, payroll or financial reporting were probably not anywhere on your list of top reasons to own your own business. However, these three items along with many others fall under the umbrella of accounting services, and require the training and expertise of a CPA. So, since your business needs these services, what should you expect from a CPA? Read the rest of this entry “
During the recession, the fiscal cliff and the so-called recovery, did your business develop cracks in its foundation? If you answered “yes,” you are not alone. Many businesses of all shapes, sizes and industries are still trying to rebuild cash flow strategies and bottom line results. Read the rest of this entry “
Outsourced CFO Services Support Small Businesses
Do you ever feel like you can’t seem to get your arms around costs? If so, you could probably benefit from the skills of a CFO. The following are other signs that you may need a CFO:
Most small business owners face at least one of these issues; however, they don’t have the need or resources for a full-time CFO. These owners often rely on a controller, bookkeeper or office manager to manage the internal accounting function.
Sound familiar? If so, you need to recognize that even though these people can do an excellent job for you, a CFO can bring additional skills to the table. You’ll probably wonder how you ever got by without this kind of person. Read the rest of this entry “
There’s no such thing as a free lunch… but a little planning ahead can make it a lot cheaper.
Let’s say you go out for lunch, on average, twice a week. At $8 per meal, you’ll spend more than $800 in one year on those lunches. And if you add in a weekly dinner out ($20), you’ll spend upwards $1,800 per year in restaurants. These little indulgences – fast food here, a sit down dinner there – add up and wreak havoc on your checkbook – and possibly your credit. Read the rest of this entry “
Contrary to popular opinion, profits are not the pulse of business. You can’t spend profits. Most companies go out of business because they lack quality cash flow — not because they lack profits or assets. Read the rest of this entry “
We’ve all been in a networking situation where we’ve forgotten the name of the person we just met. The contact ends, the potential connection is lost and with it, any hope of a business or social relationship. How you deal with people’s names in a social situation can have a profound impact on their impression of you. So what can you do to improve your ability to remember people’s names? Read the rest of this entry “