Development and Tracking of Performance Indicators

category-badge-FINANCEIf you want to manage it, you have to measure it, but what you measure depends on what factors are important to your business. No general website or how-to manual can give you a comprehensive, exhaustive list of what metrics you need to track, because what is critical to one business may not apply to another. You, together with your financial team, need to make those assessments.

However, there are some universal performance indicators to consider tracking, regardless of the industry you’re in. Here are three.

  • Customer acquisition versus customer attrition. How many new customers have you acquired during the measured time period, and how many have you lost? You’re not in business without customers, so this is a critical area to track.
  • Inventory turnover. If you’re making products, are you moving products? If you’re sitting on a large portion of your inventory, you’re losing money by paying to store stock.
  • Supply-chain costs. What is it costing you to deliver your products or services to the end of the line, be it a client, customer or consumer? You might find inefficiencies in the supply-chain process that are eating into your cash flow.

If you are interested in the services of FocusCFO, please contact us.

Next article in this series: Managing Your Overhead Cost
Previous article in this series: Trend Analysis and Pro Forma Scenarios

How FocusCFO can help manufacturers:

FocusCFO logoIn manufacturing organizations, understanding all the components of a product’s bill of materials, such as labor, material cost and fixed and variable overhead, is vital to the profitability of the manufacturer. Investments in inventory and fixed assets are sizeable; therefore, returns on investment need to be sufficient to support the appropriate capital structure and bank financing. These are just a few areas where companies can benefit from outsourced CFO consulting services.

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Jeff Lacy

Partner / Area President at FocusCFO
Jeff Lacy is a successful entrepreneur and business owner who has proven success at starting and growing a business from the ground up and then eventually selling his company. With more than 30 years in business development, Jeff is keenly aware of what areas of a business need work and how to fix them. He understands the key drivers of profitability and helps small- and medium-sized enterprises (SMEs) in Central Ohio effectively improve, enhance or implement those drivers. In his current role as a Partner and Area President of FocusCFO, Jeff and his team empower SMEs through sound financial management, forward thinking insights & tools, and proactive financial strategies, enabling them to improve their internal cash flows, reduce their business risks and increase the value of their businesses.
Jeff Lacy

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