Jim_NoTieBy Jim D’Amico, President

Business By the Numbers – Part 6” discussed the importance of tracking your business by using numbers from your Balance Sheet and Profit and Loss statement to determine your Z-Score.

The next and final topic to discuss is Additional KPI Metrics and Useful Websites. Again, we’ll use information about business performance measures from the Vistage* “Formulas for Success” publication.

Additional KPIs

“Every business has its own KPIs in addition to the traditional key indicators.  These company-focused KPIs are a way to measure success of the strategy.  For example, if the business has chosen a customer centric strategy, the KPI metrics might include:

  • Time to delivery (service or product)
  • Redos or errors or return visits
  • Number of customer complaints
  • Number of times required to complete service

Another example might be a strategy of innovation and new product development.  The KPIs might include:

  • Sales of new products during first 12 months
  • Number of new products delivered to market per year
  • Cost of new product development
  • New products in top 10 products each year

Once the business performance measures are identified, it is critical to measure the trend over time and against a benchmark. To determine the benchmark, select a goal and measure success against that goal.

KPIs are most useful and effective when reported on one single sheet for the CEO to review regularly.  The power of KPIs is their ability to predict trends in the business and success toward goals.  When reviewed in a simple one-page format, the CEO has the basis for analysis, insights and mid-course corrections, if needed.”

Useful Websites

www.sba.gov                      The U.S. Small Business Administration-SBA

www.business.gov              Official business link to the U.S. Government

www.score.org                    SCORE “Counselors to America’s Small Bus”

www.commerce.gov            U.S. Department of Commerce

www.businessfinance.com  4,000 Sources of Financing

www.rmahq.org                   RMA is a member-driven professional association whose sole purpose is                                                           to  advance the use of sound risk principles in the financial services                                                                     industry.

This concludes my “Business By the Numbers” blog posts. I hope the discussion about business ratios and business performance measures was helpful. If you need additional information or help with your calculations, I suggest that you contact your CPA to provide assistance.  Good Luck!

From the beginning, our coaching Chairs have been at the heart of what makes the Vistage experience so powerful for so many members. Vistage Chairs are a distinguished group of business leaders who come to us from a wide range of industries. Some have owned businesses, many have been CEOs of domestic and international companies, and all are united by a desire to share their insight and expertise to educate other business leaders in their communities through executive business coaching.
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