Big Red Car here keeping score on YOU!
KPIs, talking key performance indicators. Scorecards.
I thought I had written about this subject, but I cannot find it. Must be getting a little spacey, the Big Red Car.
So, today, I want to run through quickly a couple of key performance indicators you should be keeping track of at your company.
KPI me, Big Red Car
OK, dear CEO, here is a quick look at some financial and general KPIs.
Gross Profit Margin as a percentage – gross revenue minus cost of goods sold
Net Profit Margin as a percentage – gross revenue minus cost of goods sold,. operating expenses, interest, and taxes
Monthly Recurring Revenue
Return on Equity as a percentage – this is more for companies which are up and running rather than a startup
Current Ratio – current assets divided by current liabilities
Monthly Overhead Rate
Fixed v Variable Costs
Monthly Burn Rate – how much money are you losing per month
Runway – at the above monthly burn rate how many months can you survive?
Revenue per FTE
Revenue per Customer
Growth Rate of Revenue – look at this on a monthly, quarterly, and annual basis
Inventory Conversion Cycle – how long does it take to convert your inventory into cash. This one is often overlooked.
Asset Turnover Ratio – the ratio between sales and average total assets, a measure of sales generation
Customer Acquisition Cost – expense to get that customer
Long Term Value of a Custom – expected revenue over the life of the relationship assuming a single CAC
LTV to CAC
CAC Recovery Time – how long does it take to recover the cost of acquiring a customer?
Monthly Active Users
This is a snapshot, not a comprehensive list, but a great company could exist using these for several years.
How do I KPI, Big Red Car?
First, calculate all these data points.
Second, chart them on a monthly basis.
Third, study the trend. Make the trend your friend. Do not ignore the trend.
That’s all there is to it, beloved CEO. Just start there.
But, hey, what the Hell do I really know anyway? I’m just a Big Red Car, y’all. I’m pulling for you.