When you start a business, you need to deal with departments you do not have expertise in, like finance. You must identify areas to cut corners as you are running on a limited budget. To increase your business benefits, you need to measure the business functions with metrics. Get in touch with veteran business owners to know what KPIs they used.
In this article at Xero Blog, Erin Smith shares the experiences narrated by Sophie Andrews, director and owner of the Accounts Studio, and Kate Crews, founder of The Nursery.
Understanding the Big Picture of Your Small Business
Andrews guided Crews to set up metrics for her business. Smith has detailed their viewpoints as an accountant and a small business owner.
Benefits of Using Metrics in a Small Business
Business owners single-handedly regulate several departments. Majority of the times, it comes down to keeping-the-lights-on situations. With your busy schedule, you hardly get the time to sit down calmly and have a look at your finances. However, Andrews says that by introducing metrics, you will find an upsurge in the cash flow and profits. By recognizing the key areas you need to work on and understanding how it could be done, all you need to do is address those issues. Metrics help you decide which way your business would realize benefits. Not only that, they also give you a direction following which you become more productive and are able to chalk out your life’s ambitions efficiently.
Before meeting Andrews, Crews did not have much expertise in financial matters. However, she remarks that a small business owner should seek out professional help or recruit efficient resources in that field. Even if you might not have handled finances before, learning and getting up to speed will make your own job easier. Understanding where exactly you need to invest your time and which areas can run smoothly is crucial for the business.
Metrics Depend on The Business You Are In
Andrews reveals that the KPIs vary from business to business, and it is especially true for small businesses. Drawing example from her experience with a design company, she advises that you need to know which areas are costing more. While staff maintenance was expensive for the design company, inventory is the top concern for online stores. If you have just started your business, consult finance experts and focus only on essential metrics referred by them. These metrics might change over time when you grow more confident about the processes. After consulting Andrews, Crews is more open to seeking outside advice to maintain her finances.
Once you start measuring the performances of every function, you would know how to optimally use the available resources. Moreover, with KPIs in place, report generation based on historical or real-time data becomes easier.
To view the original article in full, click on the following link: http://www.xero.com/blog/2018/03/mentor-mentee-talks-understand-small-business-metrics-2/