Have you ever wondered: “What should I really be tracking in my business? What numbers actually have actionable value compared to numbers that are simply good to know?” Below is a list of key perfor- mance indicators (KPIs) that we track and use every day, week, and month, and you should likely be tracking them, too. Of course, not all numbers relate to all in- dustries, so if you run across one that you can’t track, either find your industry’s equivalent or skip it. If you can track it in your in- dustry and are simply being lazy, that is not good. But here’s a major piece of advice we learned: Numbers are only good if they are valid and real. You need to double-check your math. For example, if you have a 10% customer churn rate, and you don’t actively do any- thing to reduce churn, there is a good chance your math is off. Also, sometimes, too good of a number isn’t great. Here’s an example: Say a friend of yours boasts a 10% churn rate, but after asking a few questions, you found that they had 24-month contracts and had been in business for 22 months. To add insult to injury, they had 28 total customers. The number alone appeared great, but with a little digging, it was easily discovered that the churn num- ber didn’t tell the whole story. Remember, these are your numbers, and the only person you hurt by not being real and honest about them is you. Churn: You need to know how many customers leave your busi- ness on any given month. This is the minimum amount you need
“Numbers are only good if they are valid and real. You need to double-check your math.”
Average Annual Revenue Per Employee: If you know your sales number and number of employees, you can do some simple math to get revenue per employee and know how healthy your company is. Most companies over $1 million in revenue will have a minimum of $100K in revenue per employee. It is not uncommon to see small businesses with $125K, $150K, or $200K-plus, depending on the industry. Most Fortune 500 companies have a minimum of $500K in revenue per employee. The more revenue per employee, the more effective your business is at maximizing its greatest resource — the people who work there. This number can skew down a bit if you are in a stage in your business where you’re growing fast and hiring a lot of people. If you’re not in that stage and you find your revenue per employee is under $100K, you are likely over-staffed, or the business is going to struggle to turn a good profit and maybe even survive. Armed with these numbers, you will be in a much better spot to be proactive in your business, as you can solve minor problems before they ruin your month, quarter, or year.
to get in the following month just to break even. By tracking this number weekly and month- ly, you’ll start to see patterns of when customers leave. Then, you can take proactive steps to reduce your churn. You can also more easily find holes in your systems and processes when you know this number. Your churn number tells you if your business is growing or dying far better than your sales numbers do. You should have a full understanding of your business’s churn number and churn points. Pipeline Revenue: Pipeline revenue is the total sales volume you’d have if you won each and every piece of business you quot- ed over a given period of time. We can use the pipeline revenue number as a leading indicator of future sales. Here is a great example: If we need to produce $100K in new pipeline revenue to close $30K in sales the follow- ing month, and 20 days into the month we’re at $54K in new pipe- line revenue when we should be at $67K, then we better change something fast, or we will not hit our goal this month or the com- ing month, either.
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