Finding out which Key Performance Indicators clearly show the business is running well is critical.
We live in a time of data overload. Because we have too much information, we have a cloudy view obstructing our reality.
Sales
Create a budget each year by month. Some businesses are seasonal and dips in client activity are expected. To catch these variances early in the year so adjustments can be applied fast.
Gross profit margin by business line
Watch how each product line is performing by profitability. Understanding which department is performing well is imperative to identifying where you should deploy more cash to nurture your strong businesses.
Industry comparison
Compare the business with competitors. Illuminating good or bad differences can be analyzed and change can be made to become more competitive.
Liquidity
How fast can the company turn assets into cash? Are client’s debts to the brand going to be paid fast? On-time? Is it time to shake up the credit collections department? Is inventory turning fast or stale and headed to the dumpster? Monitoring liquidity closely will be a critical early warning system to the health of the company.
Productivity
It is vital to “track the number of units produced by employee.” This will make sure the company never gets too fat–burdened with labor it cannot afford. If this ratio is thrown off–alarm bells should be going off.
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