Financial literacy is something anyone who helps to operate a business can learn. Knowing at all times where you stand with the money you bring in, spend and are owed is essential for success.
One effective tactic is to set up tools for you to measure all of these aspects of running a business. Key Performance Indicators, or KPIs, are the way to make sure everything is aligned with your financial strategy. They’re also simple to adopt for anyone in your business — and the more transparent you are with these goals, the better for everyone internally that can help your business thrive.
KPIs aren’t just for financials, either. They’re a cornerstone for measuring how successful a marketing campaign goals. At MJR, we also use KPIs to see how effective our agents have been in collecting debts for our clients.
We’ll center on the KPIs you need to know for financials, though. They start with five that are commonly recommended by experts for all businesses:
- Growth in revenue
- Revenue per client
- Profit/loss margins
- Client retention rate
- Customer satisfaction
Although those last two may not seem to be a strong on financial metrics at first, they’re very important. The way you approach customers throughout the whole sales cycle, including when they have debts with your business, is important and does have a net effect to your finances. You’re looking for a fulfilled and loyal customer base, which inevitably leads to more profit for you.
Now that you know some of the general areas to set up and measure, a big challenge remains: the goal-setting itself. The Business Development Bank fo Canada, or BDC, suggest you start by setting goals that have these three important elements:
Choosing the right targets
You should pick KPIs that are influenced by what your employees do, including across different departments. Sales measurements and production measurements should be in sync, as one example.
Making data collection easy
Having an efficient software system that anyone can use to put in their workplace data is essential to making this all work. Formulas to measure should be simple and concise.
Not overdoing the measurements
We understand the temptation to measure many aspects in order to better plan and pivot. At the same time, it’s best to just center on a handful that are the most important to you and relevant to your business right now. You can always adjust at different intervals and add more as you really see what progress is being made.
Lastly, it’s important that you make your KPIs as shareable as possible within the company. Having a dashboard that’s accessible to all will keep these goals top-of-mind and may incentivize your staff to help move those in a positive direction.
We’re also happy to be your partners when it comes to hitting some of those key financial goals. We specialize in empathetic and tech-centric receivables services, including first and third-party programs. MJR can also assist with inbound or outbound contact center solutions, back-office processing, direct sales campaigns, and customer retention and management services.
To find out more about what we offer, visit us online: https://www.mjrcapital.com/
