If you’ve ever watched “Shark Tank,” you’ll know Ken O’Leary rips the entrepreneurs to shreds, usually for one particular reason: they don’t know their numbers.
As an entrepreneur and small business owner, you’ve got to be clear on your numbers or, KPIs – Key Performance Indicators. KPIs are the metrics that tell the real story of your business’s success – or lack thereof.
Sadly, many entrepreneurs haven’t a clue about what they need to know and track in order to validate the existence and profitability of their business. There are many performance indicators you can track, but your main focus needs to be on three things:
- Cash flow – the amount of cash coming in and going out of your business. This includes your ability to manage expenses successfully.
- Profit – the amount of revenue that is left over after all expenses have been covered and accounted for.
- Business wealth and value – your increase in value each year, well above your personal salary and profit.
Unfortunately, many entrepreneurs get frustrated at the thought of even knowing how to begin tracking their KPIs. The good news is, KPIs are easy to track with documents you probably already have handy:
- Cash Flow Reports – the cash that comes in and goes out of your business on a monthly basis.
- Income Statements – your financial scorecard.
- Balance Sheets – what you owe, what you own and your net worth.
Using these documents to track KPIs makes it easy to see how your business is really doing so you can make the appropriate changes accordingly.
“Business optimization strategist, Darnyelle A. Jervey, is CEO of Incredible One Enterprises, a business consulting and coaching firm that helps entrepreneurs and business owners realize financial and spiritual abundance. Jervey is an award-winning coach, consultant, strategist and a best-selling author with 7 books to her credit, including her latest projects: “Burn the Box: 7 Breakthrough Strategies for Standing Up, Stepping In and Igniting Success” and “Market Like a R.O.C.K. Star.” Jervey may be reached online at www.incredibleoneenterprises.com.
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