A key element in planning and understanding your business is measurement. Each month as owner, you get the scorecard of profitability. Helping the organization understand how their actions impact that profitability requires analysis, measurement and communication.
Most likely, as the founder of the business you have a gut sense of what works in the business and what doesn’t. Take that gut feel, and try to put it into actual measurement. Remember, as businesses grow or shrink, those relationships can change. Unfortunately in today’s market, you can’t afford to make a mistake on understanding what is driving the profitability. Identify a couple of measurements and then calculate them historically if possible.
Here are some important measurements that should be a part of the regular reporting process:
• Gross profit by product
• Sales dollar (revenue) per employee
• Total cost per employee
• Units produced per month by product
• Cross-training plan and activity over past month on cross-training
• On time completions over the past month (% and quantity)
Each business is unique, and it is important to take time to identify key measurements that drive the business and measure the success.
A resource to help identify measurements and how to get the organization involved is the book “The Game of Work” by Charles Coonradt. Or, feel free to give me a call at 817-729-0688 or email me at BruceBenes@b2bcfo.com. I’d welcome the chance to discuss your business and see if we could identify some quick and easy measurements to help you improve the current situation.