You may have seen some, or all, of our recent series of six blogs on how different elements of the role of your finance team can be critical to giving a complete understanding of the profitability of your business. Don’t worry if you missed them – they are still available here.
However, understanding your business, and having the necessary information to hand to make key business decisions, is often about much more than just making sure that your accounting records are complete and accurate. If you have the right senior finance team in place, then they should also be able to help you with understanding your business in greater depth and identifying and measuring some key performance indicators (KPIs) to help guide your business to the next level. At a glance these should provide insights as to whether your business is both successful and heading in the right direction.
A KPI is a measurement that is used to track the progress of the business towards a specific goal. This goal can be a specific one for the business as a whole, for a particular division or department, or as a measure to understand how the business compares to industry standards. It is important to select your most impactful indicators, and to keep these to a manageable number. At Artemis Clarke we have identified 9 KPIs that we feel provide us with the most insight as to whether we are heading in the right direction as a business. Some KPIs may be quantitative (relying on numbers) and some may be qualitative (looking at opinions or feelings). These KPIs will differ for each industry, and maybe even for different businesses within similar industries. Over the next few months our blogs will look at what types of KPIs may be useful in specific industries.
There are some factors to consider when selecting KPIs:
- How – you must have the systems/processes in place in order to track the KPI;
- Who – it must be clear who will be responsible for reporting the KPI, and who owns the KPI. These are often different.
- When – usually KPIs would be reported monthly. However it may be necessary to use longer, or shorter time periods. For instance, it may make sense to report retail sector KPIs on a weekly basis.
- Why – it is essential to be clear why the KPI is important for your business.
Once KPIs have been selected, and measured, it is then necessary to decide how to report the KPIs over time in order to have the most meaningful impact. Often KPIs may be reported in a graphical format which will allow the readers to understand in which direction the business is moving. Again, we will look at examples of how this may look in a future blog.
What it means for the business
Accurate, complete and timely records are always the foundation on which to build financial reporting for a business. We can help you get the right finance team in place to make this happen. However, once you have this in place it may be time to consider employing a senior finance resource, either on a full time or part time basis, to help you reach the next level.
Artemis Clarke works with rapidly expanding businesses to help them find finance professionals that have the experience to support them. Not just to help them survive, but to help them thrive – and reach the potential they’re aiming for.
Speak to us about how the right financial help could make a difference to your business. Call 0117 244 1891 today.