BusinessGrowing Your Business

Ratios, KPIs & Metrics – Oh My!

Posted at December 1, 2014 | By : | Categories : Business,Growing Your Business | 2 Comments

Measuring TapeI know that title just lost 80% of the audience. I don’t think even “Ebola is in your bathtub” could be more scary for most – so if this blog post starts you hyperventilating, you’re not alone. Stick with me because you know my gig is to make the tough stuff in business finance understandable and actionable. I won’t let you down. I promise.

 

This is a subject, the subject of measuring your financial progress, where the gap between the “not enough” financial advisors and the “kill you with information” financial advisors is most evident. On one hand, those that mostly advise on personal finance with a little nod to the self-employed don’t touch on this subject. On the other end of the spectrum the overkill boys will have you measuring so many things you don’t have time to even think about what it all means. As always we need something: Complex enough to be meaningful, but not so complex that it ain’t gonna happen.

 

The goal is to identify and then use the metrics/ratios/KPIs that are:

  1. Most meaningful for your business
  2. Right now

That means:

  1. You get to pick, not me and not any other expert or book. It’s your game and you determine how to score it
  2. You may change your mind at any time and go out and get a scorecard more meaningful to you

 

Doesn’t that help? It’s not a giant, unattainable goal and it’s not permanent. It’s more like picking a nail polish color than deciding on the exterior color of you’re house.

 

Here’s how to get started. And again, let’s make it as easy as possible. Here is a list from SCORE (Service Corps of Retired Executives) lists the 14 Most Widely Used Financial Ratios in a pdf here. They fall into 3 categories:

  1. Solvency
  2. Profitability
  3. Efficiency

 

You’re already picking one, aren’t you? You’re already innately interested in one of these topics over the other. So go, check it out and pick 2. If 2 sounds overwhelming, pick 1. 1 is better than 0 everywhere except golf.

 

Another great resource for this type of thing if you’re not feeling the SCORE list is Greg Crabtree’s book, Simple Numbers, Straight Talk, Big Profits!  Pick one from there.

 

Add the review of this ratio/metric/KPI to your 20/20/20 Vision sessions and you’ll rock your business. Remember:  What gets measured gets improved  [TWEET THIS]

 

If you have any questions about how to get this moving and shaking in your business, throw them in the comments or contact us: http://emilychasesmith.com/work-with-emily

 









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About Emily Chase Smith

I’m an experienced attorney and entrepreneur. With my background in bankruptcy, I’ve seen the end of the business lifecycle and use that knowledge as a lighthouse to help others avoid the rocks. I counsel with entrepreneurs to provide custom solutions to help you get back in the game. You can contact me at (949) 391-6063, Google+ Twitter emily@emilychasesmith.com

  • kim

    March 14, 2016 at 1:14 am

    I always wonder why numbers scare people so much. I guess it has something to do with the cast in stone nature of them. You can always interpret words. Thanks for the info.
    kim recently posted…Funny Insurance Claims to Brighten Your DayMy Profile

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