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PKF Texas – The Entrepreneur’s Playbook: Key Performance Indicators Part 2

by | Aug 10, 2007 | PKF Texas - The Entrepreneur's Playbook®

Note: Running most Fridays in FromGregsHead.comis a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the Entrepreneur’s Playbook page of the PKF Texas website.

Last week, we introduced KPIs. Here is an example of one type of KPI.

One of the paradigms that you need to discuss with your management team is the concept of revenue minus expenses equals profit which is limiting and one dimensional. Entertain the concept of people times process equals profit. 

For example, sales now becomes a function of y dollars being derived from x number of sales calls. Therefore if x number of sales calls produce y dollars of sales then an increase of 1 more call per person per day should produce what amount of additional sales per month? 

KPIs will help you track and improve these types of concepts and will have a dramatic and instant impact on your business. 

Now imagine you are on the golf course, it’s Friday afternoon and you get an updated KPI report on your iPhone. You see that all of your KPIs are moving nicely in the right direction. It won’t bother you at all that you just put that brand new $4 golf ball in the middle of the lake!

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