If 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.
How FocusCFO can help manufacturers:
In 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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