There are things you can set up or do in order to make sure your business remains in a healthy and vibrant state.
- Keep your finger on the pulse of what your gross margin is. The pulse is the well-being of your business – if that’s changing over time, you need to figure out why it’s changing. Is it because cost of goods went up or because the demand for the market is so great that you can afford to charge more? What you don’t want is your gross margin to go up so much that a competitor captures business from you because they offer a lower price.
- Develop a dashboard of key performance indicators (KPI) or key metrics. Those are usually related to your financial statements, like your profit-and-loss statement, your balance sheet, or your cash-flow statements. You can pull information off of those documents to calculate the key metrics that lets you know the well-being of your business. Some of the things you can put on your dashboard include things like cash-conversion cycles or inventory turns. At a glance, you should be able to tell whether you are lagging or right on track to the goals set for the company.
—Your Personal Business Trainer