Tracking KPI’s in a Small Business

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How do you feel seeing your company’s progress and all the profits you receive after much hard work? Let me tell you one thing. Profits are one of the main elements that affect your company’s progress.

To maintain your company’s progress, key performance indicators (KPI) help you assess your business’ success and build strategies for achieving your goals. As a business owner, you must keep track of your KPIs as they affect your company’s progress.

We have listed seven critical KPIs for small business owners to help you identify your business progress.

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Gross Profit

The main element for every business is its profit. If your business spends more on suppliers and netting less in customer sales, it is time to change your business strategy. Furthermore, to determine your company’s profit margin, multiply your gross profit by 100 and divide it by your sales.

 Keeping track of this KPI is essential as it will tell you how much profit you generate, contrary to the amount paid to suppliers. If your business’s profit margin increases, continue with your strategy. However, if you see a decrease, you need to reduce your company’s extra costs like utilities or wages or increase the cost of goods.

Flow In and Flow Out

This is one of the most important key performance indicators for small businesses. Flow in and out helps business owners assess whether their sales and margins are appropriate. The first step is to estimate your sales for each week and month. However, once you have an idea of what your sales history looks like, estimate your payment timings and likely costs.

Generally, this process covers 12 months, called Cash Flow Forecast. It also helps in tax preparation, new purchases, or identifying any cash surpluses. For example, if you plan to purchase equipment for your business, you add the cost to your forecast. Therefore, the new statistics will tell you whether buying the equipment will help your business make profits.ADP. Payroll – HR – Benefits

Revenue Ratio

A company’s revenue depends on the company’s profit or sales growth. If your business income or sale is increasing, it is evident that the revenue rate is also growing. To ensure your company is progressing well, check the difference between the current and previous year’s revenue growth rates.

Inventory Gross

Inventory gross tells the company how much inventory it has sold over time. Furthermore, keeping track of your inventory is essential, as it will help you plan any adjustments. 

Funnel Analysis

Funnel analysis lets you see how users move through a series of steps. It is a great way to track where users drop out– the funnel drop-off rate. Therefore, it tracks the number of visitors who left the conversion process (the funnel).

The conversion process depends on what type of business you run. Examples of conversion could be a shopping cart, subscriptions, and more. Once you identify where customers are dropping out, make strategies to boost your sales. Overall, many businesses rely on the internet as a sales tool in this technology age, so funnel drop-off rates have become a key performance indicator to track.Download A Free Financial Toolkit

Accounts Payable Rate

If you want your business to continue operating, ensure you have paid all your suppliers. Accounts payable measures the cost given to suppliers. Moreover, it is hard for most business owners to track all their financial transactions.

Hiring someone to oversee your bookkeeping will make your life easier and ensure no errors in your company’s accounts. Overall, this key performance indicator will help you identify whether you must reduce the spending on suppliers to boost the company’s future profits.

Market Share

This KPI assesses a company’s success and position in the market. How is your business performing compared to your competitors? This is the only KPI that needs regular tracking. If you do not know what your company’s progress looks like compared to others, it is impossible to change the strategies and policies.

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