Accounting | Teik Oh

Metrics for better business

Mar 09 2015

In an earlier article, I wrote about how the measurement of your business success should include qualitative measures as well as quantitative benchmarks.

I received a lot of email to ask about what quantitative metrics I thought were important in business. Now, I repeat what I said earlier, first, that qualitative metrics such as customer satisfaction and service delivery times can be just as important as quantitative measures. Secondly, that you need to define what you mean by success before you can choose the appropriate measures.

Having said that however, I thought I should deal with all those emails and provide a discussion on the types of quantitative measurements you might want to employ.

Howard from Sydney asked what might be some warning signs to watch out for.

Here are some quantitative metrics from your profit and loss account that can show your business is needing attention:-

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Never mind the width, feel the quality!

Mar 02 2015

I hope that you are keeping an eye on your business performance. However, even if you are, you may be overlooking several critical factors about how your business is performing, and some of these could be the difference between success and failure.

Most business owners probably keep a good eye over quantitative measurements such as sales, average markup, salary costs and expenses. However some of the most useful measures can be qualitative rather than quantitative, for example staff and client turnover rates or average service-delivery times.

Overall, before you start measuring your business performance, you need to be very clear what “success” means to you so that you can measure and benchmark the measurements that really count toward that success. If you are not clear on what success means in your business, you may be measuring the wrong measurements. For example if you focus on profit, you may actually be driving away customer volumes if your success is based on low margin/high volume.

Having determined what success means to you, you can then choose the metrics, both quantitative and qualitative, that drive that success. As you choose them, always ask yourself: “If I improve this measure, will that improvement lead to success?”

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How non-financially trained people can prepare a budget in 5 easy steps

Nov 25 2014

Preparing a budget is “easy” for an accountant and small business people who have some finance training. However for many it is the stuff of voodoo.

But when you break it down, there is no real mystery around the preparation of a budget, it is based on your plans and intentions, costs that you can obtain from suppliers, and some judicious making of assumptions and estimates. In truth, any non-finance executive or business owner can do it if they approach the task logically.

Here are 5 basic steps to take to compile your budget.

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Financial Understanding starts with the Chart of Accounts

Oct 10 2014

We are about to discuss accounting matters.

Hey, don’t click past, it really is important!

Well yes, a little boring too, but sometimes you need to get into the detail of the boring to get the information you need in order to do all the glamorous stuff like building a vibrant business. In fact often you need to get into details to make sure your product or service delivers its promise. Think of a mechanic – no point creating a culture of caring for the customer if your mechanics fail to bleed the brake valves every time. Or a lawyer who’s innovative and really digs deep for the client – not proofreading and the typos will get him every time.

So, one of the crucial (boring) details in any business is the accounting. You can hire a tax accountant at the end of the year; you can hire a once a week book-keeper; you can even employ a full time accounts-person and buy an expensive accounting software system; but the decision about some detail must lie with you and while you should take some of their advice, you need to decide on some key elements of your books.

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3 things ANY small business can do to grow

Sep 30 2014

There are many small business owners reading this, and they have probably read my earlier posts on business improvement and said “that’s not for me, I’m just a grinder, grinding away day to day in my small business”.

I’m thinking of Dave the floor sander who did the new floorboards at my house. I’m also thinking of Adam the housepainter who did such a good job on my house and Brad the electrician who comes over anytime I call him. These are all hard working small business owners who employ anything from none to 5 people, organising their work procedures, their finances and their people as best as they can, where every day is a busy day just “doing the stuff”.

If you are one of them you are probably thinking that all this “strategy advice stuff” is not for you. And yet, every time I talk to Dave, and Adam and Brad, they are always willing to talk about their latest ideas, about how they improved sales by getting a telephone answering service, about how once a year they take their staff inter-state to watch a football game as a reward and to build team spirit, about how they sit down together to work out priorities during the day. Dave and Adam and Brad are doing this “strategy advice stuff” without realising it because what they are doing is not couched in the language or the texts of Harvard Business School or a suit-wearing consultant like me, out to impress. They are using their experience and their common sense “doing the day to day stuff”.

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Category - Accounting

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Metrics for better business

Never mind the width, feel the quality!

How non-financially trained people can prepare a budget in 5 easy steps

Financial Understanding starts with the Chart of Accounts

3 things ANY small business can do to grow