Measure What You Want Done
It is no surprise that whenever we focus on an aspect of our business, it tends to get better. Accounting needs to be the tool that enables you to do that. Start from your top-level business goals for the year then work your way back down to the exact line item (metric) on your financial reports that you need to focus on.
Keep it simple
3 to 5 metrics is plenty. Only select the metrics that can drive the entire direction of your accounting efforts this year and Keep you stay focus.
Be specific about your goal
Focusing on growth? Be more specific. Growth in what? Top line? Focus on revenue. Bottom line? Focus on profit percentage. The number of clients? Focus on the number of new clients each month. Size of projects? Focus on the average invoiced amount per project. These are your “results metrics” — they tell you how well you’ve performed in the last week, month, quarter.
Identify the driver metric
Once you’ve identified your “results” metrics – you’ll need to work with your team to drill down further to identify your “driver” metrics. If your goal is to increase $500k in revenue, how many new clients is that? How many proposals do we need to do to close that many new clients? How many people do we need to chat with each day to hit that number?
Sounds simple, and it works.
This year, know exactly how well we are performing around every corner and stop “finding out” how we’ve fared from our tax CPA 4 months after the year has ended.
See part 2 of our Spring Clean Your Accounting series this year where we talk about purging your chart of accounts to keep your accounting aligned with your agency operations.