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What are KPIs and How do They Impact Your Business?

What are KPIs and How do They Impact Your Business?

Far too often, we find that a lot of our prospects and customers are flying blind – they are not given the key information they need to know about their businesses on a regular basis to help them make wise business decisions. This is flat out unacceptable – and puts a major roadblock in the path to a successful and prospering business.

At Sound Business Services (SBS), we believe in going the extra mile, and finding all the important information and data we can to help you grow your business and reach your goals. That all starts with key performance indicators (KPIs).

With KPIs, we not only can see how your business is running and what aspects need to be fixed or changed, but also find specific data that helps us deliver you powerful solutions to business growth, now and into the future. With KPI reporting, we get a vision of the key drivers that decide your company’s success. KPIs enable us to track the key metrics that determine the goals you are trying to reach as a company, which can be financial or non-financial, such as hours worked or closed leads vs. lost leads.

For example, with our car wash clients, we track the number of cars washed each month (non-financial data). We then divide total wash revenue per month (financial data) by the number of cars. This blending of financial and non-financial data leads to powerful information that helps determine growth strategies. When you determine the dollars per car, car wash owners can see trends and discover how much they need to upsell to customers to make up for any missed revenue. Another key area is tracking the number of rain days in a month, which can be devastating to a car wash business. We then compare those numbers month-to-month and help clients plan accordingly.

Examples of Labor KPIs 

This is just the tip of the iceberg of what we can track. Other KPIs on the labor side include utilization rate, which helps determine if the billable time your staff spends on a client meets the hourly workweek, or if they’re spending too much time for what you’re billing. Another task is finding out the revenue per hour, which gives a scope of your hiring process, if you’re pricing your services correctly and how well you’re handling your sales. Simply put, if the job takes you longer to complete than the hours you’re budgeting for, you must charge your clients more. This is all about budgeting hours vs. actual hours.

How about the ROI on total labor cost, which breaks down the actual company profit you make on the total cost of your staff? This says a lot because it shows how important your team is and what they bring to the table. A highly effective team ensures your investment is worth it, but a team that’s not producing likely means you must shift your focus on strategically improving the very foundation of the company.

Examples of Non-Labor KPIs

As mentioned before, the combination of tracking financial and non-financial data really gives us the key metrics we need to help you grow and succeed.

With non-labor KPIs, there are a number of areas to track. One is gross profit percentage, which illustrates how efficient your company is at delivering its services. In other words, how much are you truly making on the work you do? We can track this by client, job, team, location and many other areas to get transparent results, and see your strengths and weaknesses.

Other metrics to track include client retention rate and employee turnover rate. It’s so important to not just get new business, but also keep these clients happy for the long run so that they stay with you. That requires having a great staff that will always go the extra mile to carry out your message and please the customer. If you’re seeing frequent turnover in your clients or staff, you must work to see why and strategize what to do to fix this problem. SBS can help with this!

Let Us Know How We Can Help

If this all seems overwhelming, that’s normal. One thing we often realize is that our clients may not know what KPIs they should be tracking or monitoring. Don’t worry because we are here to help!

The first thing we do is sit down with you to understand your pain points. At the same time, we will review your financials and put together a list of recommended KPIs to track for you. Then, we’ll meet with you on a regular basis to go over your KPIs, discuss trends, celebrate successes and learn from mistakes.

It’s a painless, yet powerful process to finding the pulse of your business, and determining what can be done to ignite business growth. If you would like to look at what specific KPIs work best for your business, or have any questions, contact us today, and you’ll be on your way to realizing success and recognizing your goals.

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