Our Half-Retirement© program consists of 6 results-oriented steps. The fifth step in our program is Setting the Autopilot. Phase one of this step is KPIs for Everything.
Profit is not a manageable activity, it is the result of activities that are linked to profitability such as your sales and marketing efforts, your employees’ productivity, management of your cost-of-goods-sold and overhead… Performing these activities more effectively is what leads to greater profit.
Reviewing your financial statements regularly is imperative, but the downside to this is that you are only reviewing historical data. You are only analyzing your business retrospectively. To make better business decisions you need to examine your results in real-time. This is where KPIs come in.
Key Performance Indicators (KPIs) are quantitative business metrics that measure a specific criteria’s performance. They are your key economic drivers. KPIs “add up” to profit. If your KPIs are in line, profits will come. The most common KPIs include: Net Margin, Gross Margin, Accounts Receivable Turnover, Current Ratio, and Quick Ratio.
Every business has 5-7 economic drivers. You must determine what these KPIs are for your organization then measure and review then regularly.
Our next blog will cover Step 5 – Setting the Autopilot, Phase 2 – Manage by Flash Report to creating your Half-Retirement© blueprint. If you would like to speak with us about our Half-Retirement© program or have a business question or issues you would like to discuss, please feel free to reach out to us via our website Contact page: www.ParadigmStrategies.com.