Posts Tagged ‘business’

Do Your Business Metrics Need an Oil Change?

Friday, May 23rd, 2014

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:

  • 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. 

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)

 

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What Are 5 Things You Should Do Financially Now?

Tuesday, January 7th, 2014

As a small business owner, you probably find the end of the year a busy time. Before you know it, you find yourself into January trying to determine what the New Year will bring. One of the keys to being a successful business owner is taking a break from the day-to-day routine and spending some time doing valuable planning. This is sometimes referred to as working on your business, not just working in your business. To help you with this process, here are five things you should consider doing as a small business owner as you start the New Year.  (more…)

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Why Is A Relationship With Your Banker Important To Your Business?

Thursday, August 1st, 2013

You have a bank. But do you have a relationship with your bank? A relationship with your bank is important to the success of your business. A banker can be a great source of information and a valuable part of your team. Too often it seems that the banker is only contacted when money is tight or there is an immediate need for cash flow. A business then spends several weeks obtaining information for the banker and attempting to communicate the importance of the current need. If the business had an on-going relationship with the bank, then this process is much easier to handle for the banker and the business.  (more…)

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Do You Understand Your Company’s Financial Statements?

Wednesday, June 19th, 2013

Big GAAP vs. Little GAAP has been a hot topic in recent years. (Okay, “hot” topic may be a stretch…) The question of the hour is: Why should a privately held company with close relationships to owners, bankers, insurers and other financial statement users need to comply with the same complex rules and extensive disclosure requirements that a publicly traded company is held to? (more…)

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Looking To Stay Up-To-Date On Ohio Oil & Gas News?

Thursday, June 6th, 2013

The oil and gas industry in Ohio is constantly changing. So if you’re involved in the industry or are looking to break into the industry, it’s important for you to stay up-to-date on what’s happening. If you haven’t checked out, Ohio Gas & Oil Magazine, then I highly recommend you do. This monthly publication covers an array of topics from government regulations to industry best practices.  (more…)

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