Your KPIs act as short-term goals for you to hit in order to meet your longer-term goals and big vision. However, they won’t help you achieve that vision unless you take action.
For this reason, it’s important to develop a list of immediate action steps you and your team can take to hit your KPIs.
Examples of some immediate action steps include:
Review the cost of materials from your suppliers. Are you buying the right materials at the right price from the right suppliers? You may be buying timber from the same supplier you buy your tools from for convenience, but you may be able to get the same quality timber from another supplier for a cheaper price, or better quality timer at the same price.
Review the cost of your labour – both employees and contractors. Are you utilising your employees well? Do they get allocated first? Do they get allocated to the right jobs? How do you use your contractors? Are there minimum rates you need to pay? Are you using them on the right jobs?
Set up clear payment terms for your customers. Do they know when to pay you? Are there progress payments? Is there an upfront payment?
Negotiate payment terms with your suppliers and then stick to them. Can you convert cash-on-delivery suppliers to account? Can you extend 14-day accounts to 30 days?
Follow up all quotes issued within seven days or, if you know that they are looking to make a decision sooner, make sure you contact them before that date. Do you set reminder calls for issued quotes? Do you contact them to offer advice or suggestions on how their project could be improved or managed better?
Prioritize your actions
Once you have developed your action list, you can then rank your actions in terms of importance, based on the impact they will have on your business. Those that are the highest priority should be the ones that are costing the most time and money as well as causing the most pain to you, your team and your customers. Meanwhile, those that are minor inconveniences can wait until after you’ve addressed the big issues.
You should also ask yourself which of the action items can be completed quickly and easily, because they will be the items that give you the quickest wins and improve your position immediately. That will then give you the breathing space you need to start tackling those areas that will take a little more time to rectify.
It is all about working smarter, not harder, to start to improve your position. That is not to say that hard work won’t be involved, but it just makes sense to tick off the tasks that require less effort at the beginning.
It’s important to keep in mind that this isn’t a ‘set and forget’ process. Instead, you’ll need to measure your progress regularly to ensure that you are moving towards your goals.
Once you establish your plan, you must measure it against how you are actually performing. If you do that, it will drive you to act. To get things done. #GSD.
By checking your profit and loss statement on a monthly basis, for example, you can see whether the average margin on your jobs is increasing, decreasing or staying the same. Benchmarking your margins and comparing them to your KPIs can then highlight whether there is more room to improve, or if you’re meeting (if not exceeding) your expectations. This will greatly help you not only manage your business and minimise any financial problems, but it will help you see whether you are moving closer to, or farther away from, your goals.
If you effectively measure your performance, you will achieve superior results.
If you need a helpful hand, please contact us for a complimentary chat.
Are you in need of finance or funding to help grow your business? Do you clearly understand the cost of money? Contact us for a free 30 min strategy consultation. Click here to get started
Let us review your business and funding requirements to help you grow your business and achieve your business goals – big and small.
Want to take your business further with your cash? Book a 30-minute cashflow consultation and I’ll give you a copy of my book “Build It & The Money Will Come”. Click here to get started
Tony has 33 years’ experience as an accountant, and 13 years’ experience as a CPA. His first 18 years’ experience involved financial, management and operational accounting roles at a senior management level, in the security, transport, and forensic accounting industries