“What sank the titanic?…” the top of the iceberg or the bottom!”

…asks Peter Hickey, President of the Institute of Business Advisors & CEO of MAUS. “What concerns me is that so many people are starting or building a Business Advisory but their seems to be a lack of training on the fundamentals of strategic metrics and Business Planning.

I want you to imagine a typical iceberg. At the top of the iceberg we have KPI’s (Key Performance Indicators) such as Sales, profit and Cash. All extremely important and determinants of success and failure – but these are what we called lagged KPI’s

 

When you look at this picture above you can see that the areas below the waterline, drive the top level goals. The clear message that we send to Business Owners is that monitoring sales, profit and cash at the end of each month is the starting point of good business management…but you need to expand your monitoring to include non-financial KPI’s. Two simple examples…

  • Number of leads or web visitors is an indicator that future sales are likely to occur.
  • 0r if we ensure that staff have weekly telephone script training sessions then this ensures that sales conversion rates remain high and the business continues to meet sales targets. In this case a KPI could be a monthly target of 4 (ie 4 sessions)

As a Business Advisor we strongly recommend that you encourage your clients to expand into a greater level of KPI’s. Below are some more examples of KPI’s.

The Institute of Advisors is running a course on this on May 24th in Sydney as well as a Certified Business Advisor credential. Contact Peter Hickey hick@maus.com.au for more details.

Sample KPI’s

CUSTOMER

  • Number of customers
  • Market share
  • Average value sale
  • Customers lost (no. or %)
  • Average time spent on customer rel’s
  • Sales closed / sales contacts
  • Satisfied customer Index
  • Number customer service calls
  • Customer loyalty Index
  • Number of complaints
  • Refunds
  • Marketing expenses
  • Average duration customer relat.
  • Number customer visits

PEOPLE

  • Employee suggestions for improvements
  • Employee suggestions implemented
  • Patents pending
  • Satisfied employee Index [research]
  • Ratio new / established products
  • Employee buy-in ($ or %)
  • Marketing expense / customer
  • Investment in development new markets

FINANCIAL

  • Revenue
  • Profit
  • Cash
  • Total assets
  • Total assets / employee
  • Revenues / total assets
  • Revenues / employee
  • Profits / total assets
  • Return on capital employed
  • Profit margin
  • Return on investment
  • Total costs
  • Market value

SYSTEMS & PROCESSES

  • Number of calls by accounts receivable, sales or customer service.
  • Administrative expense / totals revenue
  • On-time delivery
  • Average lead time
  • Lead time, product development
  • Lead time, from order to delivery
  • Lead time, suppliers
  • Lead time, production
  • Average time for decision-making
  • Inventory turnover time
  • Improvement in productivity

PEOPLE

  • Employee suggestions for improvements
  • Employee suggestions implemented
  • Patents pending
  • Satisfied employee Index [research]
  • Ratio new / established products
  • Employee buy-in ($ or %)
  • Marketing expense / customer
  • Investment in development new markets

INNOVATION

  • Revenue from new products
  • Expense on R & D
  • R & D expense / total expenditure
  • IT development expense / IT tot. expense
  • Hours, R & D (no. or %)
  • Investment in training
  • Investment in research (e.g., customer)

 

Peter Hickey | MAUS

Peter Hickey

CEO/Founder at MAUS
Peter Hickey is a worldwide leading SME expert. He has been active in buying and selling businesses and has a passion for helping business owners achieve what he has achieved.

Peter was the founder of the brand MAUS in 1990. He successfully built the company from a one-man business to a multi-million dollar concern and sold it a multibillion dollar publisher.

Peter Hickey is a bestselling author and creator of a wide range of business tools published by MAUS. He wrote a bestselling book on Business Planning. He won the Ernst & Young NSW “Entrepreneur of the Year” award in 1999. He founded an educational division and authored a management training course that is now an accredited Executive Masters of Entrepreneurship run through one of the largest Universities in Asia.
Peter Hickey

Financial Services General

About Author

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Peter Hickey

Peter Hickey is a worldwide leading SME expert. He has been active in buying and selling businesses and has a passion for helping business owners achieve what he has achieved. Peter was the founder of the brand MAUS in 1990. He successfully built the company from a one-man business to a multi-million dollar concern and sold it a multibillion dollar publisher. Peter Hickey is a bestselling author and creator of a wide range of business tools published by MAUS. He wrote a bestselling book on Business Planning. He won the Ernst & Young NSW “Entrepreneur of the Year” award in 1999. He founded an educational division and authored a management training course that is now an accredited Executive Masters of Entrepreneurship run through one of the largest Universities in Asia.