The higher this percentage is, the more money you keep per pound of revenue. As a result, it’s worth keeping a track of.
It’s calculated by dividing net profit (after all expenses) by sales.
Set KPI’S
Track Your Progression
We believe that goals deliver results. We use various Key Performance Indicators to ensure your business is going in the right direction.
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Net Profit percentage
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Expense vs sales percentage
We recommend customers keep a track of their biggest expense percentages on a regular basis. This is where most money can disappear fast, so keep on top and stay in business.
Take any expense and divide by the turnover figure in the same period. Compare this figure to previous periods and also to industry averages to see where you stand.
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Debtor days
This is the average time it takes customers to pay you. The lower this number is, the quicker you’re getting your cash in.
Divide trade debtors by annual sales and multiply by 365.
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Customer churn rate
This is the percentage of customers who discontinue using your services in a period. You need your growth rate to be higher than this to ensure your business is growing.
Divide the number of customers who have left by the original number at the start of the period to get the percentage. Compare to your growth rate to ensure your numbers are going up.
Some of Your Performance Challenges
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I’m not sure I’m as efficient in business as I could be?
By selecting the right Key Performance Indicators (KPI’s) you can check your efficiency and compare to previous periods or industry averages. You can’t hide from the numbers. -
I don’t know how far I’ve come – it doesn’t seem like very far?
If you select the right KPI’s, and keep a track of the numbers then you can monitor your progress over your time in business. QuickBooks allows you to compare previous periods so you can see this quickly and easily. Or we can make you a KPI dashboard to keep track of your numbers. -
I don’t have enough time as it is, how will I fit this in?
Doing your bookkeeping online, along with using an easy to maintain KPI dashboard can give you fast management figures. Making the time to do this will save rafts of time in the long run – do it now! Let us know if you need a hand!