With the growth of Internet sales, the use of Big Data has become standard with large companies. The sheer volume of data available can be overwhelming to a small business owner. But here’s the good news: you don’t have to be a math person–or even like math–to understand how key metrics can increase the success of your enterprise. Large companies may pay people in house to analyze their data, but by focusing on one or two important pieces, small business owners can make data work for them.
Sometimes this useful information is known by a few people but isn’t actually recorded somewhere. Taking the time to learn how to enter this data into programs you already use, such as Excel or a CRM (Customer Relationship Management program), means this info is more accessible to more people. This not only makes it easier to analyze the data but affords a layer of protection if someone leaves the company or is absent for an extended time. One easy place to start is with Google Analytics, a free tool that will allow you to track and analyze visitor traffic on your website.
According to Intuit, KPIs, or Key Performance Indicators, provide business owners with a tangible method for evaluating their company’s progress toward achieving strategic goals. This in turn can influence important decisions regarding financial health and future growth. Even by focusing on just one or two KPIs, small business owners can create a clear direction for their company.
Intuit recommends the following KPIs for small businesses:
- Cash Flow Forecast: Predicting your cash flow over the next 4 weeks enables you to anticipate any issues and adapt your strategies accordingly.
- GPM As Sales Percentage: Tracking the relationship between your GPM (Gross Profit Margin) and sales amount will help you compare how much money you’re keeping vs. how much is going out to suppliers.
- Funnel Drop-Off Rate: When visitors to your web site don’t complete the process, it helps to know at what point they dropped out. Armed with this knowledge, you can make informed adjustments.
- Revenue Growth Rate: This financial KPI can help you to see whether growth is increasing or decreasing, and by how much. Growth rate can be compared monthly and annually for the most accurate picture.
- Inventory Turnover: Seeing which products are selling (and at what rate) enables you to make reasonable decisions about ordering.
- Accounts Payable Turnover: Keeping track of your payouts to suppliers helps you know when and how to reduce spending.
- Relative Market Share: Analyzing how your company compares to your competitors is critical when planning for long-term profitability.
If you’re uncertain of where to begin, consider contacting us to book a discovery call so we can learn what is most important to you and your business. We want to work with clients to help them be more profitable and improve cash flow. By using the information available, you will be enabled to make intentional, informed choices to ensure the health and growth of your company.
