Retail Observer

RETAILOBSERVER.COM MARCH 2018 62 M any of you may have heard the term "KPIs", but how many of you know what they are? I am continually amazed at the number of business owners that don't know anything about KPIs (key performance indicators). KPIs are numbers, percentages, averages or rankings that tell you how well your business is performing. These KPIs will tell you if your business is tracking up or down, meeting industry averages or specific targets for your business. Most appliance service company owners may have gone into into business because they were really good at repairing appliances. Yet many may not have had a a clear idea about how to operate a successful business. Is that you? You were now in business with no clue as to how profitable you were. You just watched the checking account as your major means of tracking your business. Everything is good while working alone, but as soon as your business begins to grow and you need to hire help, things begin to get serious. Payroll, insurance, more vehicles, and overhead expenses increase. Oh, and don't forget about the home office—the wife doesn't want the business in the house any longer, so you have to start looking at moving the office. However, as you grow, so does the knowledge you need to run a successful business. It's no longer just yourself and a truck—you now have employees. You have to be willing to learn about business growth and management and implement some basic business principles along the way. You must be willing to educate yourself and know what to look for to keep the business on track. Running a business isn't that easy. It takes a lot of work and a lot of business knowledge to make any business really successful. This is where KPIs come in. Small business owners continually face a variety of challenges, tough choices, and financial decisions that can have a significant impact on revenue as well as the future of their business. Small business owners must be strategic, creative, customer-centric, and take a proactive stance toward fiscal planning. KPIs are not a one and done format. Some KPIs need to be looked at daily, while others can be tracked weekly, monthly, or even quarterly. You should be tracking no more than five KPIs at any given time. Sometimes it can be as few as three. If you start tracking too many KPIs, it can become overwhelming, possibly confusing. The fewer KPIs you can track and still know your business is running efficiently and profitably, the better off you are. Some KPIs are standardized such as your P&L statement, balance sheet and cash flow statement. The problem with these reports (KPIs) is that many business owners only look at the P&L once a year or once a quarter. Very rarely are they looked at monthly. Many business owners manage their business from the checkbook. Yes, your cash balance is a type of KPI, but it's not telling you anything about how well or efficient your business is running. It's just telling you if you have any money in your account or not. Below are few KPIs and intervals for the appliance service industry: • P&L statement (monthly) • Balance sheet (monthly) • Cash statement (monthly) • Cost of doing business (quarterly) • Billed revenue (daily) • Revenue per technician (weekly/monthly) • Call back percentage (monthly/quarterly) • Completed calls per day (weekly/monthly) • Average sale per customer (monthly) • Average parts usage per call per technician (monthly/quarterly) • Average revenue per call for parts & labor (weekly) • First time completes (monthly/quarterly) I think you will be surprised at what you will learn from these KPIs. It will either put you at ease knowing your business is running well or it will start your engines turning to correct some issues. Please visit www.applianceservicesecrets.com/kpi/ for a free KPI cheat sheet. Best wishes as you travel the road to success. "DependableDon" Harris founded Appliance Service Secrets, helping appliance and HVAC service businesses improve their operating processes, procedures and efficiencies, offering coaching and consulting services. Please visit www.applianceservicesecrets.com or email info@applianceservicesecrets.com. S E R V I C E D E P A R T M E N T RO KPIs: WHAT'S THE BIG DEAL?

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