Identifying Metrics

Identifying key metrics to measure business performance for the business owner is an important CFO Service. I think there is a need for the Part Time CFO to identify metrics that are easy for the business owner to understand and to identify what is critical to the business in the following areas:

 

Sales

 

Gross Profit Margins

 

Employee productivity

 

Advertising effectiveness/Lead generation

 

Overhead

 

Fixed Asset Productivity

 

Interest Coverage

 

 

Every business/industry needs to take a unique look at the type of metrics that best evaluate performance. What may be an important metric for one business may be totally unimportant for another. Working together with the business owner to identify the critical metrics is the best way to go.

 

I also believe that you do not want to have too many metrics. With too many metrics things start to get complicated for the business owner to utilize and understand. Getting the business owner focused on the key metrics to measure his business performance will prove most productive in the long run. As the CFO sees the business owner utilize and understand the metrics presented, the CFO can introduce more metrics.

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