In the fourth and final part of our Boom or Bust series, we are focusing on assessing your sales metrics and customer base to measure performance. The tactics we’ve outlined below are designed to help you mitigate risk, grow your business and diversify your customer base.

At TGG, we believe in simplifying things whenever possible, especially when it comes to developing a basic business model. Accounting is complicated enough! One area where simplification helps tremendously is benchmarking. While every business has some unique characteristics, businesses within industries share many more similarities than differences with respect to how they make money and what range of profitability can be expected.

Simplifying and comparing to a Basic Business Model provides the benefit of benchmarking any business against the expected industry business performance at any given time. It can be broken down into the following five parts; Revenue, Cost of Goods Sold (COGS), Gross Profit, Sales, General and Administrative Expenses (SG&A) and Net Operating Income. The basic business model is a static equation, but the inputs change by industry, making this simplistic model extraordinarily powerful.

Key performance indicators provide insight into the financial health of your business. Before you can track key performance indicators, however, you need to have accurate financial reporting.

There are three key areas where key performance indicators (KPIs) come into play: sales, operations, and safety.

We’ll review two KPIs in each area that will help you manage your business more efficiently and effectively.