Key Performance Indicators
Numbers should be a servant, not a master. Running a business without monthly financials is like playing golf without keeping score but even monthly financials are of little practical value if they aren’t telling you what you need to know about your business.Just as bad is using the numbers simply to comply with regulations – rather like driving a car by looking in the rear view mirror. More important than simply having monthly profit and loss numbers is building a financial dashboard of Key Performance Indicators (“KPIs”) that deliver key information to the CEO. | | | |
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Any company that sells time has what amounts to an inventory of future hours that its clients have committed to buy from it at an agreed rate. This commitment may either be firm or contingent on future events, but it is important to find a way to calculate the size of the inventory on hand at any point as this is an important measurement of workload and ultimately of future revenues. | | | |
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