Key Performance Indicators
A Key Perfomance indicator is a measure that suggests whether a particular strategy is being achieved or not. For example, a restaurant may want to reduce its food costs and will try to achieve this by minimising waste. To ensure management stay focused on achieving this objective, the restaurant will record the amount of food being thrown away each day and set a target of say 3% of sales. If the restaurant is able to achieve a 2% waste target then this suggests that the restaurant is reducing its food costs. A business will need various targets focused on various aspects of the business, to ensure all are working towards longterm profitability, not just specific targets. Profits won’t be increased if the restaurant serves mouldy food to a customer who then posts a bad review on facebook!
At WLM we provide a service to the hospitality industry through the use of cloud software applications where key target areas are measured on a weekly basis, for example weekly sales, weekly wages, food, beverage costs and waste. In real time our clients using this service can see if there are potential problem areas, for example, staff rosters, a new menu or waste.
Business Coaching Alternatives
Careful cashflow and tax planning and a conversation about how to measure performance before it hits the Profit and Loss Statement can be very powerful. This alone can turn a business around because it will focus attention on value added activities such as ensuring clients pay on a timely basis, identifying quality control issues, identifying successful sales and marketing activities and controlling expenditure. Your accountant can also talk with you about how to improve administrative inefficiencies.
On a big picture level, your financial planner and accountant can analyse your finances and discuss the appropriateness of investing further into your business, borrowing to expand your business or just maximise profits in the business and invest outside the business.
For those just starting out, there are also cheaper business coaching alternatives. Consider looking for mentoring from your employer as many large employers offer middle managers mentoring services. Consider looking for mentoring from professional associations and alumni networks at Universities. I am currently involved with the UTS Womens MBA network focussed primarily on mentoring executive women. This program is a purely voluntary program. Check out government grants and assistance at https://www.business.gov.au/assistance. Alternatively consider going to back to university to do further business training.
Talk to your Accountant first
All business owners will look for coaching in some shape or form at various stages of the business cycle. Initially when your motivation is high, the accountant and/or spouse may be enough. But as the business grows or as a glass ceiling presents itself, a business coach experienced in your industry can provide that extra push required to get you to the next level. Any significant business change management project will have a risk of failure and for it to succeed as much effort needs to be expended on employee commitment to change as on the project itself. Involve the accountant at the beginning of the business coaching project to mitigate risk and set key performance indicators for the business coaching project as well as for the business.
By Amanda Rogers, FCPA, MBA (fp)
WLM Financial Services Pty Ltd
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