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Cashflow tip – Business Development KPIs – How just a few can have a big impact on business
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Published on Monday, 13 February 2017 09:27
Business owners know there are many things that take up their time and unfortunately there is NO “one silver bullet” in order to have a big impact on business development as we would all like – every business is unique – I see it as I visit businesses in the many industries. More often than not it is just a few business development KPIs (key performance indicators) that together can have a big impact. This applies to drivers of financial performance or personnel or production or operations. If you don’t have KPIs you should consider a hand-full that you can track and measure to see what effect key decisions are having on your goals to improve and grow the business.
It will depend on the industry generally –
Sales Company - eg. volume of sales weekly/monthly, gross margin percent
Manufacturer - machine hours weekly/monthly, labour $/machine hours, material margin percent
Contractors - billable hours, rate per hour etc.
So key drivers can vary between industries, but if you were away from your business, what 5-6 things would you want to know about how your business is performing? That is, those that impact the bottom line.
To see what KPIs matter, scenario analysis can help sort out how much a KPI will affect the profit, and how much you need to improve the KPI to achieve a significant/desired rise in profit. It’s also called a sensitivity analysis.
An example – a business that generates $80,000 profit
This shows that a 3% change means the biggest impact will come from No. of hours sold – so that should receive the most attention first.
Many businesses know their sales and monitor their rise and fall, but you need to be more sophisticated than that. And set realistic targets – find your business development KPIs then set SMART goals and involve your team – Specific, Measurable, Achievable, Realistic, Timely.
Next determine how you will achieve the new targets and get to it NOW!
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