What Are Key Performance Indicators | Edmonton Business Consultant
Well, we can quantify, you know, 10 ways to Sunday, uh, on how much is dropped or how you know, how much we needed to be. But what do we actually need to count to fix the problem?
Cause it’s mad.
Hi. Welcome to another edition of ask the spurl CPA. Today we’re talking about what our Kpis, key performance indicators or KPIS. I Have Tyson here with me here. Uh, Tyson, thanks for joining us again. Okay. So Tyson a you disappointed the real didn’t make it to the playoffs I little bit, but I’m just happy it’s over. It’s enough to watch the train wreck anymore. Yeah, I guess that’s the glass half full. We can, we can move on to the next season. So, uh, the quote that we have here today is it Jim Collins quote, you know, author of six business books, including one of my favorites. Good to great. The good to great companies did not focus primarily on what to do, becoming great. They focus equally on what not to do in order to be great. So the statistic that we have here is industry Canada. You know, 50% of all Canadian small businesses go out of business.
Uh, and 42% of these fails. Small businesses will cite that the word unable to attract enough customers. And that was one of the reasons why they went out of business. What are the ones that were always trying to solve here? So the story that we have here is we get a business owner and they come into us, Edmonton Business Consultant, you know, to get their financial statements done. And a lot of business owners, they struggle just to get accurate financial statements. But, you know, we helped them get those financial statements and we help them understand those financial statements. And, you know, we, we find out that revenue here is the issue. You know, they, they, they have revenue is the issue and the things that the, they need to count. You know, there are other things that they need to count that don’t appear on these financial statements.
Um, and you know, they won’t be in the financial ratios. So when it comes to these things that they need to count Tyson that are not in the financial statements, you know, what, what question should these business owners be asking? Uh, first is, uh, what is the financial statement ratio analysis. So financial statement ratio analysis. These are basically the questions that you can answer from the financial statements. You know, what does your gross margin, what are your overhead expenses, what is your revenue, what is your revenue compared to last year? Um, these are questions that you, you could actually answer based on the financial statements alone. Okay. What is the second most common reason businesses fail? The second most common business reason businesses fail is they run out of cash. Edmonton Business Consultant, so, you know, number one is they can’t attract enough customers. And number two is they, they run out of cash and a financial statement analysis and effective way of predicting cash shortfalls.
It really is. Yeah. The financial statement ratio analysis is an effective way of predicting cash short falls. Edmonton Business Consultant, sometimes, yeah, doing that annually. Uh, I can’t predict it soon enough. Edmonton Business Consultant, you could run out of cash in the middle of the year, but you know, running out of cash that you need something that you can, you can project in most in most circumstances based solely on those financial statements. So it’s, it’s a really useful doing that financial statement ratio analysis. Um, you know, with, with your accountant, with a professional and they can, you know, tell you if a potential shortfall is, is, is coming. We’ll ratio analysis and always give you enough information to solve the root issue. It will sometimes ratio analysis is, is not going to solve the root issue. You know, it can tell you that you’re, you’re running on a cash, which is really important.
Um, or you can tell you another issue. Maybe you have an issue with profitability, uh, issue on your margins. Uh, but sometimes it won’t tell you how to fix it. You know, what, if you, you, uh, you don’t have enough revenue. Well, we can quantify, you know, 10 ways to Sunday, uh, on how much is dropped or how, you know, how much we needed to be. But what do we actually need to count to fix the problem right there? Business owners tend to overanalyze financials instead of digging deeper. Yeah, hundred percent. So a lot of times they’ll, they’ll go raid into that ratio analysis and it’s good to a point, you know, to go on to that ratio analysis. But you know, if the problem is that we don’t have enough revenue and we know we don’t have enough revenue, how is it going to help us?
You know, if we go back and it and determine, you know, what our revenue growth has been for the last five years, we already know the answer revenue is too low. That’s the problem. Um, so are, there could be another issue. Maybe staff turnover is too high. Edmonton Business Consultant, you know, what are the things that they, other things that they can focus on in their business rather than going deeper and deeper into the ratio analysis? How do we actually fix the problem rather than just over quantify the problem? Or are there numbers business owners should be tracking that are not in the bag? Yeah. There are 100% other numbers, quantifiable valleys that they should be tracking that are not in the financials. Um, and they should be just diligent in tracking these numbers as they would be tracking their financial statements themselves. What does KPI stand for and what does it mean?
So Kpi stands for key performance indicators and you know, my interpretation of, of key performance indicators are these are the things that you need to track that do not appear in the financials. So everything that appears in the financials, this becomes part of the, you know, the ratio analysis. We’re looking at the ratios that are in the financial statements, but there are cold hard numbers that you should be that are not in those financial statements. There are not a esoteric, a vague terms that, you know, uh, how you’re feeling Ooh, type things, but they’re really cold hard numbers that you should be tracking, uh, in your business, uh, likely in each and every week, uh, on, on what’s actually going to drive those financial statements. All right. What is the most common reason for businesses? So that most, yeah, that most common reason for business failure is the failure to attract enough customers.
So, you know, we go back to it, you know, a, of all the business owners that you know, fail, 42% of them will say they couldn’t find enough customers that makes it by far the most common reason a business failure. And then we always have those top three reasons. They, um, they can’t attract enough customers. They run out of cash and they can’t find the right team. Those top three reasons, uh, will overshadow all of the reasons, Edmonton Business Consultant, you know, living bigger than all the other reasons put together. Uh, but that reason they can’t have enough customers that they can’t attract enough customers. It’s, it’s by far the single biggest reason. Okay. What are some of the KPIs that business owners can track to fix revenue generation issues? So the pis that you can track to fix revenue generation issues? Um, you know, first and foremost, I would be tracking, you know, the number of reviews and specifically Google reviews that your business has.
A, and this might sound, you know, a little bit, uh, crazy, but you know, how many Google reviews, uh, does your business have? But 88% of all buyers these days and most small businesses before they purchase from those small business, Edmonton Business Consultant, they’re actually looking at the Google reviews. That doesn’t mean that they won’t, uh, purchase from you what 88% of them are at least going to look at it and consider it. And you know, when we move right up through the chain of the other things that they should, they should, a track is the, you know, the Google reviews to the amount of content on the website to how much they’re spending on advertising, to how many impressions that those advertising, those advertising pieces have a, to the number of clicks on that advertising, uh, to the, you know, to the number of leads that that actually generates.
So there are, you know, very set, quantifiable values that each and every business owner should be tracking in their business, uh, if they’re having revenue generation issues. Okay. What is the third most common reason for business? Third most common reason for business failure, you know, it goes, you know, failure attract enough customers running out of cash and this, the failure to have the find the right team to execute a on the project. And like I said, those three reasons are going to overshadow, uh, almost all of the other reasons put together. Um, but that, that one, the failure to find the right team, uh, that one is uh, uh, Yup. One more significant problems for sure. What are some of the Kpis you can focus on? We get a better team. Yeah. And this is one that, you know, maybe you know, I learned La further down through my business career is that, you know, when you talked about team and culture and retention and, and those sort of things start to sound like a little bit more, Edmonton Business Consultant, uh, not quantifiable, you know, things that they’re there, they almost have this intangible that how could you possibly, you know, quantify, be able to find the right team, but you can 100%.
There are a lot of indicators that are going to help you along that path. Um, you know, rate down to if you want to, you know, find the right team. How many candidates are you actually interviewing to have one to fill one hire? Are you hiring the first person that walks through the door or are you seeing a hundred people and actually meeting 100 people’s? I don’t mean getting a hundred resumes. I mean meeting 100 people to actually hire someone. Edmonton Business Consultant, you know, that’s a, a key performance indicator that you can easily track, you know, to try to find a better team or, and this extends beyond just acquiring new team members. This also extends to, um, you know, how do you develop your existing team and your existing culture within your business? You know, people will say, well, how could you possibly track and quantify culture?
Well, how often do you actually meet with your team? You know, the, the old standard, the monthly staff meeting, that almost never happens in other businesses. You know, that gets cancelled in summertime. It gets canceled once close to Christmas. And by the time everything’s said and done, that monthly staff meeting is, is like, you know, six times a year as opposed to a business that actually gets in front of their, uh, team members each and every week. So we’re talking in business that, you know, is getting into in front of them 52 times or maybe a couple of, uh, of, uh, vacations, maybe 50 times a year. Edmonton Business Consultant, the number of times that you actually get in front of that team. It doesn’t matter what culture or what vision that you have, if you don’t get in front of the team members and try to explain that vision, it’s never going to execute it.
It’s never going to happen. And so you can 100% track, you know, how many staff meetings that you have, how many training sessions that you have. Not just have this goal of having a great culture, but you know, what is your, your metric to implement it. So I think that’s what we have here today on key performance indicators. Kpis. Thanks so much for, uh, uh, for tuning in. And it was always, please hit the like and subscribe buttons so we can continue to deliver your tips on how to beat the odds at business. And if you have any questions or comments, please leave them below and we will address them in a future video. Thanks very much.