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Epic Formul a To Manage Your Business For Growt h The Five Key Areas To Focus on When there s so much going on in a business it can be difficult to know what to focus on and how to set things up for growth Business owners find themselves being pulled in all directions and struggling to find time to work on their business If this sounds like you or someone you know we ve come up with a formula to help get things on track and simple 1 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Most businesses can be broken down into five key areas being 1 2 3 4 5 Your product service or solution How you market promote and sell How you operate and finance your business How you handle Human Resources management How you handle Customer Service If you can proactively manage and report on all these areas you will find business and life in general less stressful There will be less crisis management i e dealing with things before they become a problem rather than after the fact Being great at sales won t help you if you take your eye off the ball with delivery and finance Your business could struggle with unhappy customers who won t pay Being the best inventor of products or services won t help if you don t focus on marketing and selling Your fantastic product will sit on the shelf collecting dust To stay sane you need to get systems in place to proactively manage these key areas You probably can t handle all of them yourself so you may need to employ people or outsource some tasks at some stage Let s discuss each one and how you can manage measure and improve them 2 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
1 Your product service sol ut ion This is probably the most difficult for business owners to delegate or outsource i e development of your product service solution however you can train others to take over in time Enhance your product service solution benefits from listening to your customers clients and keeping a close eye on competitors How can your solution better fulfil customers requirements How are competitors doing it and how can you be better than them Things are moving so fast today that you absolutely must keep up with what s going on out there You may need to make some radical changes if you want to remain relevant in your marketplace You may need to move things online if you are experiencing competition from that direction If you can t beat em join em You may need to get help or undertake some education yourself about how it works There s lots of information available online that you can learn from There are some really smart young people you can learn from yes shock horror you can learn from people younger than you When experience and innovation get together the results can be awesome Summary Listen to customers clients Keep a close eye on competitors Consider doing business online Learn from staff particularly those at the coal face Run a regular SWOT Analysis with your team Strengths Weaknesses Opportunities and Threats 3 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
2 How you Market Promot e and Sel l Marketing is experiencing a massive shift currently with digital marketing and social media and getting expert help to decide on your method message and delivery is vital to staying competitive and relevant Marketing encompasses many issues including branding your message how you convey your value proposition your unique selling proposition your edge over competitors marketing method or medium e g TV Radio advertising Press Ads Online Digital Social Media Affiliates and the list goes on It s really about working out where your clients hang out e g if they re over say 75 they re probably not online much whereas younger people spend a lot of time looking things up on hand held devices and computers This dictates what method medium you use to get in touch with your clients customers Once you ve worked it out you then need to decide on your message and how you re going to capture the interest of customers You don t just say We ve got lots of this do you want to buy some You need to work out what is the solution or benefit you can offer to customers You need to appeal to their emotion in order to make a connection It s common knowledge that people purchase on emotion way more than price so it makes sense to give most airplay to the solution or benefit you ve got to offer than the price Articulate your value proposition in a way that engages people to want to learn more 4 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Once you ve got someone s interest it pays massive dividends to keep track of their contact details on a CRM system Customer Relationship Management because not all customers buy immediately A good CRM enables you to keep in close contact with potential customers and keep sending them messages and offers If a customer has bought from you once and had a good experience they are highly likely to buy again The sooner you start this in your business the better A good database can be a valuable business asset useful if you plan to sell your business sometime in the future Nowadays online marketing is the major form of marketing for many businesses The objective is to drive as much of the right traffic as possible to your website in order to engage with people This can be done via Pay Per Click SEO Banner Ads Social Media Links to other sites etc Your site needs to be set up to keep visitors there for as long as possible and provide them with many ways to engage e g items to download newsletter blog to subscribe to chat box function etc Your website needs to be mobile optimised i e it needs to be able to be navigated easily on a hand held device a large percentage of searches are done on hand held devices now Can you see why you need to engage outsourced help in this area 5 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
what business owner has the time to keep up to date with all of this Don t think of it as a cost but an investment in the future of your business Once you get it started it creates it s own momentum Once you ve got interest from a prospective customer client it doesn t end there You need to convert that interest into a sale Having a well tested and documented sales process is vital to ensuring you achieve a good conversion rate and make the most of your marketing spend There are good salespeople and not very good ones Some see themselves as salespeople and some behave like order takers You can guess which gets the best result Understanding the need to nurture a sale is a great start to achieving a good sales conversion rate Having a process for handling sales helps keep salespeople on track It s no good just having a nice chat with customers Salespeople need to guide customers along a path towards a sale They need to be good listeners and well versed in how the product service solves problems or creates benefits Salespeople need to appreciate the value proposition for a customer i e how much benefit are they going to derive compared to the cost This is commonly referred to as ROI or Return on Investment If you are good at conveying this you will win more sales than people who are motor mouthed product peddlers i e those who don t listen to customers Good tools and sales aids are vital to supporting the efforts of 6 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
salespeople For example your product may help a client to save lots of money time If so an ROI tool really helps them to justify the initial outlay think solar panels Brochures and professional looking business cards help people if they want to review information later or show it to someone else A demonstration of a product or service can be a great way for potential customers to experience the benefits you have to offer At the start of a business the owner may be the main salesperson however when growth starts to happen others may need to get involved and this is where it s vital to have a well documented sales process for them to follow A documented process also enables improvements to be easily absorbed 7 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
There are some great tools available online that can help salespeople to stick to the system check out www Pipedrive com for example Summary How s your brand looking it may need a refresh Understand the value proposition for customers clients Work out where your customers clients hang out Clearly articulate your value proposition Have a CRM system Regularly communicate with contacts Have a good website and strategy to drive traffic to it Provide many ways to engage on your site Ensure your website is mobile optimised Engage outsourced help if you don t employ a marketing person Have a tested and documented Sales Process Understand the need to nurture prospects Ensure salespeople are good listeners Ensure salespeople appreciate the value proposition Build and ROI tool to help with sales Have professional brochures business cards etc Have a product service demonstration that customers can engage with 8 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
3 Operat ions and Finance The best way to proactively manage your operations is to systemise them In order to set up a system you have to get the knowledge out of your head and into a format that staff can understand and follow You need to identify what are the most critical actions in your business who is responsible for them and how they should be done Once you know these things you can share this information with others and begin to do less of them yourself Obviously staff needs to be trained and monitored in these actions but a little time invested in this direction will pay big dividends down the track Running a business successfully is a bit like following a recipe There is a saying If you can read you can cook Systems in your business are as important as the products and services you sell If you don t give your customer a variety of products to choose from and a quality product then they will go somewhere else Look at your business operations in the same way Each of these products becomes a quality product and sometimes even a unique product This only happens by following a recipe Your recipe for success is actually having systems making sure they are functional and using and constantly improving them If you have systems in place your key staff can replicate easily the critical actions This will give you the opportunity to have a break when you want and know the business will perform in the same way as if you were there If you don t have systems you will always be a slave to your business and this is not a healthy way to live 9 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Systems can take many forms e g manuals or a web based method Web based methods for many business processes are popular today They enable owners to run a business remotely when necessary e g when on holidays or even just from home If a staff member has a question you don t have to scurry back to the shop to explain the answer If you have a web based system you can simply direct them over the phone to the relevant information and talk them through it These types of systems are not as expensive as you might think What price do you put on your own sanity and health Google Drive is a good tool for housing documented procedures that can be accessed from anywhere in the world at any time If you have any thoughts about expanding your business or increasing the number of outlets then it is critical that you have systems in place If you have more than one outlet you can t cut yourself into two or three When your product service is good you need to ensure you replicate that each time you make a sale You need to do the same with your business Things that are replicated are easier for your staff to follow This helps greatly with staff retention Staff who feel secure with the systems they are operating under have much less stress One example is Point of Sale POS is sometimes the last thing that is considered whereas it should be the first because it is the most important from a customer s perspective 10 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
This can easily be systemised for sales staff so that they know the which products go into the optimum position You as the business owner know this but your untrained staff may not so you need a system to ensure this is understood and action taken as per the system Systems stop you the business owner from having to be the bad guy girl all the time When something isn t being done as per the system you can simply say This is the way we do it here and this is the system It leaves no doubt in the mind of staff about the way things need to be done This is why McDonald s is so successful They have systems and they say This is the way we do it here Systems also create an environment for improvement It gives staff the opportunity to contribute new ideas and see them incorporated into the system another motivator and retainer of good staff 11 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
4 Finance This is the lifeblood of your business profit and cash are the key elements Cash comes from profit and profit comes from proactive management of revenue and costs Timely and accurate reporting on both profit and cash flow helps you to plan and take advantage of opportunities Running out of cash is a key reason for business failure yet few owners manage it proactively There s plenty of help available and the cost pales into insignificance when compared to the outcome The numbers are often a bit of a mystery to business owners When you re busy running everything involved in a business there just isn t time to do a degree in finance to understand how it all works in detail A few accountants are good at explaining financial concepts in plain English to business owners We ve decided to throw out the text book on financial accounting and come up with a simple way of looking at how the numbers work in most businesses If you ve seen our infographic Business Numbers Made Easy Roadmap you will see that the key numbers are actually quite simple Following is a little more explanation about each one 12 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Break even Point An often overlooked but vital number in business It s the amount of sales you need to make to cover your costs and overheads i e to avoid losses This is a great place to begin making a profit You can download our Break even Calculator to work out yours Cost s These are the direct costs of creating your product or service i e labour materials etc They can be directly compared against your sales to determine if say a job or service is profitable It pays big dividends to know the true cost of your product or service as this enables you to charge the right price to ensure a gross profit It s vital to understand your gross profit because if you can t make an acceptable gross profit you are not likely to make a net profit i e profit after running expenses 13 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Pricing As mentioned above this is impacted by the costs of delivering your product or service If you want to make a profit you need to charge a price that will cover your costs and running expenses Often market pressure dictates price as you may need to compete on price If this is the case and you plan to be profitable your only room for maneuver might be reducing your costs Once you ve set a price it s vital to monitor profitability constantly to ensure you stay profitable It s very common for costs to creep up but price is kept the same and profit becomes eroded over time Many businesses fall into the trap of not maintaining a process for constant small price increases You can factor it into your contracts with customers or use increased costs as a reason for regular small increases Most reasonable people understand that you can t constantly absorb cost increases without passing them on If you deliver a good quality product service your customers should appreciate that you need to be profitable Raising the subject of a price increase can be a good time to subtly remind your customers of why they deal with you i e use it as a marketing opportunity to let them know why you re the best at what you do Make the invisible visible explain what you do that s better than your competitors and why it s actually more economical to deal with you despite you being a little more expensive e g they only have to do the job once with you whereas a shonky cheap competitor may cause them to do it more than once or it wears out etc 14 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Running Expenses These are the expenses incurred in the day to day running of your business e g rent admin wages marketing etc This is an area that can get wildly out of control if not monitored closely and easily eat up your profit All kinds of non business related items can creep in which as well as being not tax deductible blur your view of how profitable or not your business is It s best to have a clear view of your business running expenses and keep your personal expenses separate That way you stay compliant with tax law and also get a more accurate picture of your business profitability At the very beginning of your business it pays to consider what your running expenses will be and factor them into your budget Budget This is simply a document that sets out your future plan for sales costs and running expenses so you can see how much money you will make or lose Not having a budget in your business is like flying blind and just relying on hope and luck to end up with a profit If you don t have any plan for your profitability it s highly likely you will struggle to make any It s not that difficult to do see our template budget spreadsheet Once you ve worked it out you can enter it into your accounting system and compare each month your actual versus your budget to see how on or off track you are It enables you to make changes quickly rather than waiting until the end of the financial year to discover you ve made thumping losses and started to run out of money Being able to see a trend in month 3 rather than month 12 of the year gives you the opportunity to save 9 months of losses highly worth the effort 15 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
All of this is a great start to ending up with a profit in your business Profit is great and what is also vital to running a successful business is Cash Flow Here s a little more information on this side of things Cust omer Payment s If you give customers time or terms to pay this can have a big impact on your cash flow Whilst there may be an agreement or understanding in place about when they should pay the reality is that not everyone sticks to it You need to have policies and processes in place to manage every step of the way from the contract to how and when you invoice what methods of payment you provide how and when you follow up arrangements you make for them to pay debts off sending them to the debt collector etc Every dollar in outstanding amounts owed by customers means that you have to find them from elsewhere i e delaying payments to suppliers borrowing putting your own money into the business etc We often see customer payment handling treated as an afterthought rather than being run proactively The danger with this attitude is that customers get the impression it s OK to make you wait and you will be behind others in the queue who are more proactive about getting paid You just need to have a process in place and someone to stick to it constantly to ensure a constant flow of funds You can download our E Book How to Get Your Customers to Pay On Time and Improve your Cash Flow for help with this 16 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Suppl ier Payment s The time it takes you to pay your suppliers is another opportunity for managing cash so it spends as long as possible in your bank account If you give your customers terms and they take longer to pay you than you take to pay your suppliers you will experience cash squeeze This is a common situation where the person dealing with accounts doesn t like calling customers for payment but pays suppliers straight away because they also don t like dealing with them calling and asking for money My advice would be to have different people dealing with each one i e have someone who is good at calling customers with reminders to pay without getting them offside and have another person deal with supplier payments Have a policy of not paying suppliers before the due date i e take advantage of every day of credit that you can get Constant negotiation with suppliers for better terms pays big dividends for your cash flow Make it a policy to regularly shop around and keep good records of what business you ve done with suppliers for ammunition at negotiating time 17 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Job St ock Jobs take time to finish and stock sits in store for some time before being sold or used on jobs During this time they are both sucking up cash i e jobs incur costs of labour and materials and you have to pay suppliers for stock to sit on the shelf The money to cover this has to come from somewhere The longer jobs are in progress without being invoiced and the longer stock sits on the shelf the more cash is needed So it s vital to manage jobs so they can be invoiced ASAP so you can get paid Progress payments and deposits are a must if a job is going to take a while that way your customer is helping to pay for the costs and you avoid having to borrow or put your own money into the business Your job management software will help you to manage jobs so they can be finished as efficiently and quickly as possible A good stock management system will enable you to handle stock so it sits in store for the minimum time necessary It gives you an insight into historical trends of stock movement and allows you to set lead times to ensure you have stock when customers want to buy but it doesn t sit there for too long sucking up precious cash 18 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Taxes and Loans We may not like having to pay tax but unfortunately it s a fact of life If you want to run a sustainable business you need to manage your tax obligations e g GST PAYG Company Tax etc If you don t manage it properly the Tax Office will soon be on your back demanding payment when you can least afford it Try to set up your regularity of tax payments in the best way e g monthly quarterly or yearly Get some advice and do some planning on which will work out best for your cash situation It depends on your business turnover i e yearly sales figure how often you have to do a GST return You need to have a good understanding of how much tax you are holding until it s due to be paid because you may think you ve got great cash flow but then tax time comes and suddenly you ve got a problem i e your bank balance drops to nothing and you haven t got enough to pay wages and suppliers etc Some people put the tax into a separate bank account until it s due to be paid This can be good but if you manage it right the cash can be used to fund cash flow during the tax cycle so long as you ensure it s available when tax times comes Sometimes the funds just aren t there to pay everything that is due all the time Peaks and troughs occur e g seasonality sales drop suddenly expenses creep up beyond what can be afforded an unexpected disaster or event occurs Funds need to be found from somewhere e g borrowed from a lender or the business owner s 19 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
If you need to borrow from an outside lender e g bank you will need to provide good information to support your loan application They will want to see proof of your trading history and profitability as well as evidence of your assets and liabilities The information needs to be accurate and up to date If you ve got a good and accurately set up accounting system that will help as well as giving them comfort you ve got your finger on the pulse of your numbers They will almost certainly want to see a Budget and Cash Flow Forecast as well so they can be confident you have the capacity to repay the money when it s due 20 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Owners Money If you can t or don t want to borrow from an outside lender you may need to put in your own funds or seek input from other shareholders in the business In this situation it s important to handle the transaction correctly in your accounts i e it needs to be entered as a loan and not income so that you aren t paying on tax on the funds unnecessarily and the repayment needs to come from the same account We recently saw a business owner pay tax on the repayment which was incorrectly entered as wages by the person doing the books Cash Fl ow Forecast As can be seen the cash management in a business can be quite complicated with money coming and going and amounts being due at certain times To try and manage this without a system can be very worrying and confusing for a business owner The best way to avoid worry is to manage the situation with a Cash Flow Forecast It simply sets everything out in black and white You can see when funds are coming in and going out and what will be your bank balance at any given time in the future if everything goes as you plan If you monitor it closely and compare actual events to your forecast you will be in a good position to take action when things don t go to plan to avoid running out of money 21 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
You can download a template Budget and Cash Flow Forecast to help you Summary Systemise your operations Get the knowledge out of your head Train staff in the system Ensure staff follow the system Use web based systems for efficiency Use systems to capture improvements constantly Know your Break even sales point Understand the true cost of your product service Set your pricing right based on costs to ensure a profit Know your running expenses to ensure they don t get out of hand Have a budget to monitor performance Measure customer payments to help cash flow Manage supplier payments to help cash flow Closely manage jobs stock to help cash flow Understand taxes and loans to help cash flow Treat Owners Money the right way to avoid overpayment of tax Have a Cash Flow Forecast to keep things on track and avoid running out of cash This information is not designed to be a technically accurate lesson in accounting rather it s designed to highlight what are the key numbers you need to understand and manage in your business to help you make a profit and manage cash flow If you can get your head around them and put in place processes to manage them it will be a great start to a sustainable and profitable business 22 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
5 Human Resources HR management is a stumbling block for business big and small Very few handle it well and proactively Industrial Relations laws may have scared some business owners into risk management in this area It s really about developing people and helping them to be satisfied at work Satisfied and happy staff can make a business fly Getting things done is so much easier when people are engaged with the overall objective HR is probably the most vital area of business as it impacts every other area so closely Happy st af f creat e great product s and services f or happy cust omers who are happy t o pay Just Google human resource management system software and there are lots of systems and guidance on how to provide proactive HR management right through from hiring managing and firing A good HR management process starts with a detailed Organisational Chart i e a big list of what gets done in the business who does it now and how critical it is When you start off in business it might be that the business owner is the one responsible for most things When business starts to grow you will need to transfer some of the tasks to others Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d 23 www CFOonCall com au
You will need to come up with Job Descriptions for those you employ so there is clarity about what is expected A well documented Organisational Chart and clear Job Descriptions help to avoid gaps and overlaps in tasks Regular review provides opportunity for constant realignment of job descriptions Nothing ever goes exactly to plan in small business so it s vital to keep reviewing things and developing as you go Realigning Job Descriptions and discussing with staff gives them opportunity for input and helps you to be on the same page Hiring people can be a scary proposition for the uninitiated My advice would be to hire slowly and fire quickly i e don t be too quick to employ someone unless you are absolutely certain they are the right fit for your organisation Do your homework check references and check with others in your business to ensure they feel comfortable with a new recruit especially important in a small team If it becomes clear a new recruit isn t fitting in despite your best efforts to induct and train them take action quickly to move them on In a small business you can t afford to have high maintenance passengers everyone needs to pull their weight We can highly recommend a system called enableHR as a great HR management tool We use it ourselves All the templates are up to date with IR law i e they are compliant It guides you through the whole process of hiring managing and firing It houses all your records for easy access It s a bargain at the monthly subscription cost compared to the time risk savings 24 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Summary Consider HR Management as a way to develop people Have an Organisation Chart Have clear Job Descriptions for everyone including the Business Owner Regularly review staff performance Hire slowly and fire quickly Listen to your staff Use a HR management system to ensure compliance with IR laws Cust omer Service Satisfaction of customers is a result of how well you manage all of the above If cash is the lifeblood of a business and happy customers pay then Customer Service is vital to business survival and success The very best way to gauge customer satisfaction is simply to ask them Whether its wait staff at a restaurant who ask how the meal was or an account manager who calls a client to ask how things are going it s vital that someone does it If you do it well clients keep coming back and sales will grow It s much better to get proactive feedback on how you can improve constantly than to wonder why sales are falling when it s too late or to be regularly dealing with complaints In today s customer driven market i e online reviews social media etc it s more vital than ever that you provide great customer service Businesses who treat customers poorly will quickly be outed online think Tripadvisor Airbnb etc This type of site can be your best ally or your worst enemy 25 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
If you provide a great product service people will tell others and you will get more customers conversely if you provide a poor product service you will lose customers I ve seen it in action as a result of good poor ratings on Tripadvisor those that get good ratings are consistently busy but those with poor ratings are empty and possibly wondering why As well as repeat business from happy customers you also want them to proactively refer you to others as well as giving good Copyright CFO on Cal l powered by CAD Part ners Pt y Lt d testimonials Referrals can be the best source of customers and definitely the cheapest form of marketing They are the easiest to convert to sales as the referee has done much of the work for you in building trust with the potential customer Great testimonials are worth their weight in gold and a good item to have on your website particularly when they include commentary from your customer about what your product service means to them e g how much time money it has saved them Potential customers will be able to easily identify with them and understand your value proposition more clearly 26 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Summary Recognise Customer Service is vital to business success Ask customers what they think Ask customers how you can improve Check any online review systems that may include your business e g Tripadvisor Ask customers to refer you to others Ask customers for testimonials Put testimonials on your website brochures etc Measuring t he Five Key Areas We ve covered information about each of the five key areas in business now let s consider to measure effectiveness of Copyright CFO onhow Cal l powered by CADthe Part ners Pt y Lt d each area and how that will impact on profitability Following are some suggested Key Performance Indicators KPIs for each area Product Service Devel opment If you want to maintain an edge over your competitors you need to have a plan to constantly develop your products and services KPIs to ensure improvement here might be Number of Number of Number of Number of new products services launched R D projects undertaken Product failures job project delays hold ups 27 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Market ing If you want to keep pace with the market you need to keep letting them know who you are and that you are ready and willing to help KPIs here could be Number of visitors to your website or premises Number of engagements with site e g downloads newsletter signups etc Number of enquiries received from a particular marketing source Another useful KPI to ensure a good return on investment of your marketing dollars could be cost per enquiry This helps you to gauge the value of all marketing dollars spent and which method to focus on Number of contacts on database or Customer Relationship Management system CRM Number of enquiries to converted to sales opportunities Sal es Once you ve got interest from the market you need to convert that interest into sales and ultimately dollars onto your bottom line KPIs here could be Number of quotes provided Number of quotes won Number of quotes lost Sales conversion rate i e number of sales calls made compared to those converted Upselling rate i e how many add on products services were sold to customers 28 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Operat ions When you have made a sale and it s time to deliver to your customer To ensure a consistently high level of service it s vital to measure your operational performance KPIs here could be Personnel productivity i e how many hours have been sold compared to those paid to service staff Work in Progress days i e how many days are jobs in progress prior to finishing Rework hours to fix mistakes on jobs Stock turnover rate Level of backorders Number of days for customers to receive orders Product returns complaints defects Hours downtime of staff equipment Overtime hours Finance Happy customers have no reason not to pay on time so if everything else is in order some KPIs here could be Accounts Receivable Days i e how many days are customers taking to pay on average Profit by Customer or type of customer Product Service or type of product service Division Accounts Payable Days i e how many days are you taking to pay your suppliers Number of price increases or discounts given 29 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Human Resources Happy staff provide great service to happy customers who are happy to pay so how happy are they WHS incidents hazards Staff turnover Staff satisfaction Ideas for improvement submitted suggested Staff training hours events attended Incentive payments made Staff sick leave days Cust omer Service Once you have a customer it s much easier to retain them than it is to get new ones KPIs here could be Customer retention rate Number of new customers acquired Number of major client visits attended Customer complaints received Testimonials acquired Referrals received 30 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
Systems to track KPIs can be as simple as a spreadsheet However there are so many terrific systems available to keep track of things like marketing sales finance HR etc why would you waste time with spreadsheet madness Enterprise Resource Planning ERP systems can be a massive time saver and give great insight into various aspects of business performance Help with planning and prioritising systems implementation is a great investment to ensure it s done right from the start Help from someone who has been involved in using ERP systems and the information from them to review and improve business performance is vital A CFO is someone who is looking at your numbers and converting them into intelligence so you can make better decisions in real time One of the greatest benefits of running your business focusing on the five key areas and systemising them is in Business Value A proactively run and systemised business is worth much more than one that runs out of the owner s head It doesn t rely on one person s knowledge and can survive if key staff leave These are two of the most impactful points when calculating business value For a no obl igat ion chat about your business growt h pl ans f eel f ree t o cal l us on Aus 1300 36 24 36 NZ 0800 180 400 31 Copyr igh t CFOon Call com au by CAD Par t n er s Pt y Lt d www CFOonCall com au
