Author Box
Articles Categories
All Categories
Articles Resources

Use Key Performance Metrics to Run Your Business

April 25, 2012 | Comments: 0 | Views: 175

Do you use Key Performance Metrics to run your business? One of the truisms I've come to believe wholeheartedly is that no business owner is good at every aspect of owning and operating a business.

To be a little clearer, the skills to own and operate a business are many and varied. What tends to attract a business owner to operate their own business is a self belief that they can do one or two aspects of running a business very well and either hire the skills they lack or learn these with time.

I have also firmly come to believe that too many business owners do not understand well enough how their business is performing and more importantly, what they could do to make this task easier for them.

By law, every year a business must submit a tax return to the IRS to state how the business performed. Most business owners outsource this task to a professional such as a CPA or Enrolled Agent. Some choose to create and file their own tax return which is perfectly fine as long as it is done correctly; especially if at some point they want to sell the business. It will almost be impossible to sell a business if the tax returns are not accurate as a bank will not consider lending against the business to the buyer/borrower and the buyer will not take the risk of buying the business if they are not comfortable with the quality of the tax returns of the business.

What's important, though, which I see many business owners missing, is that the financial data of the business provides a gold mine of information. Tucked in the Profit and Loss or Income Statement is critical information about the gross sales, the gross profit, the net profit or net income before taxes and taxes to pay the government to arrive at the net income. However, this document often has other documents that collect and manage the data that rolls into the Profit and Loss and this is where the gold mine exists.

With a little initial time and effort, a business owner can have their book-keeper isolate what I call Key Performance Metrics or KPM's and have these provided on a weekly or monthly basis to allow the business owner to know the direction the business is traveling and what, if any, adjustments they need to make. The KPM's will vary with each business and generally fall into specific buckets. Some examples include the total number of calls, the total number of calls to place orders, the total number of calls to cancel orders.

The KPM vary with each business but they only reveal themselves by looking for them and then paying attention to them. There is a great expression - if you cannot measure it you cannot manage it.

And so that's my challenge to you. What are your KPM's? You don't have time to collect this data? If you don't have time then delegate it to someone you trust and just as importantly, put aside a specific date and time each week or month to go over it. The numbers don't lie and will tell you more about your business in the quickest time possible to provide your greatest return on time to manage and run your business.

Andrew is a 5-time business owner that helps entrepreneurs exit or enter business ownership. His services include helping owners sell and/or buyers purchase an existing business or consult on purchasing a franchise. He also provides certified machinery and equipment appraisals and business valuations.

Andrew currently holds the Certified Business Intermediary (CBI) designation from the International Business Brokers Association (IBBA), the highest credential awarded by the IBBA and the Certified Business Broker (CBB) designation from the California Association of Business Brokers. He also holds a Brokers License with the California Department of Real Estate, is a member of the Sacramento Metro Chamber of Commerce and the Chair of the Sacramento Chapter of the California Association of Business Brokers.

Andrew is also the published author of four books on buying or selling a business available for instant download at If you have questions, email Andrew at or visit his website at sacramento business broker

Source: EzineArticles
Was this Helpful ?

Rate this Article

Article Tags:

Business Owner


Business Owners


Total Number


Little Initial Time


Net Income


Initial Time

In India, employment opportunities are set to grow by a good margin in the coming year, a phase which was started in the turn of the second decade of the 21st century. organisation, candidates with

By: Sarkariexam l Business > Careers Employment l April 01, 2013 lViews: 11705

Sometimes it is amazing to see that certain jobs can precipitate huge turnouts in the recruitment drives. It is as if thousands of people were waiting for the vacancy advertisements and the moment

By: Sarkariexam l Business > Careers Employment l December 30, 2012 lViews: 690

In recent times, jobs in healthcare segments have grown tremendously. It is anticipated that this growth curve will continue for the times to come. Various factors are responsible for this

By: Sarkariexam l Business > Career Advice l December 27, 2012 lViews: 446

Are you in a dilemma whether to choose web based CRM or not? If yes, don’t worry. You aren’t the sole person having this doubt.There are numerous firms trying to make out whether investing in a

By: Reneta Vasileva l Business > Customer Service l December 23, 2012 lViews: 409

If you think about it you will realize the fact that each business has its own set of risks that are involved in it.The trade secrets that you have and the information related to the business is what

By: brumbrum1 l Business > Risk Management l December 23, 2012 lViews: 263

As the time is changing, concierge management services are now growing despite the slowing economies of the world. The main reason of it is the need that is highly specific to the people who like to

By: willsmith10 l Business > Management l December 23, 2012 lViews: 333

The "acid test" comes from the world of metallurgy, and refers to the purification of gold. This metal rarely occurs in the form of pure nuggets. Instead it has to be extracted from ore, a tedious

By: Bruce Hoagl Business > Entrepreneurialisml June 11, 2012 lViews: 217

Achilles was a character in Greek mythology made famous by his heel, which his mother had failed to protect when she dipped him in the River Styx. Paris discovered this secret weakness and exploited

By: Bruce Hoagl Business > Entrepreneurialisml June 11, 2012 lViews: 168

Entrepreneurs a just like everyone else in this respect: They prefer smooth-sailing to their destination. But we all know that there are times when we must navigate unexpected changes in the wind and

By: Bruce Hoagl Business > Entrepreneurialisml June 11, 2012 lViews: 169

When you start a lawn service business, you need to choose the right equipment and tools. You need to mow the most lawns in the least amount of time.

By: John C Millsl Business > Entrepreneurialisml June 08, 2012 lViews: 186

February the second is Groundhog Day, the American holiday which inspired the 1993 movie of the same name, starring Bill Murray and Andie MacDowell. Bill's character, a weatherman, finds himself

By: Laura Ashley-Timmsl Business > Entrepreneurialisml June 08, 2012 lViews: 233

The frozen yogurt business is thriving and this tasty frozen dessert is becoming more popular by the day. If you are like many forward-thinking entrepreneurs, you are thinking about taking advantage

By: M McHalel Business > Entrepreneurialisml June 07, 2012 lViews: 307

What is the impact of tax when selling a business? Most small business owners spend a lot of time wrestling with the decision about when they will put their business on the market and try to sell it.

By: Andrew Rogersonl Business > Entrepreneurialisml April 25, 2012 lViews: 166

Discuss this Article

comments powered by Disqus