When you’re running a busy startup, taking time for business KPIs may not seem like an immediate issue. In truth, looking at basic startup KPI sets can give you the insight you need to dramatically increase profits and prevent significant revenue loss. QuickBooks helps startups manage more than just their taxes. With QuickBooks, you can learn more about your business through KPIs that could turn your startup into a secure company.
Uses of Startup KPI
Startup KPI can be the difference between getting a loan so you can expand your business and missing a critical opportunity. Banks use this information to judge the health of your business and its potential for future growth. There are immediate uses for startup KPIs, of course. The right data gives you the perfect view of your business’s regular dealings, potential for growth, and even shortcomings of general management practices. In order to get the most holistic view, you need a varied set of business KPIs.
Inventory Turnover
This startup KPI has immediate effects on your business, and it will have a heavy impact on your revenue in the short-term. Inventory turnover is a fairly simply KPI that allows you to see exactly how quickly product ships in and back out again. It lets you know which items are flying off the shelves, and which are not. It also demonstrates ordering problems in inventory and realistic storage needs. The simple KPI gives investors a good idea of how regular and broad your customer base really is, but this benefit, like most on our list, is secondary to the in-house benefits yielded by these insights.
Cash Flow Forecasts
How well can you estimate next month’s revenue stream? Almost all businesses see a seasonal boom at some point in the year, whether during summer break, back-to-school booms, or holiday rushes. In order to handle a larger sales volume, most stores need seasonal staff. That staff needs to be paid, however, and that extra cost depends on the extra revenue. By examining your past ability to forecast sales numbers and profit from the past months or years, you can spot issues with changing budgets before they become a problem. If you are estimating far more or far less revenue than your business brings in, you have a clear sign that you should invest more time in examining the details brought to light by this and other business KPIs.
Funnel Drop-Off Rate
KPIs do more than tell you how well you are running your business behind the scenes. Funnel drop-off rate is another crucial startup KPI. This number shows you how many people fail to follow through on a purchase. Every visitor to your website or customer who walks through the door of your storefront has started along the road to a sale. Many people who visit your store or website, however, won’t make an actual purchase. Some may begin working through your shopping cart app or even bring an item to the cashier with a question without following through. Funnel drop-off rate gives you a good idea of whether you’re reaching the right customers through marketing campaigns, and it also gives you insight into why customers fail to commit to a sale.
This KPI is the start of a process that can revolutionize your website design, store layout, product selection, or even employee training. If customers frequently leave shortly after speaking to an employee, you should invest in more training for your staff. If customers run repeated searches on your website, but leave without adding an item to their cart, you have a sign that you aren’t providing an essential product customers expect to find. This KPI helps you spot issues while simultaneously offering ways to turn those losses into profit.
Revenue Growth
This key startup KPI gives you the most direct summary of your business’s health. Has your revenue stream grown over the past year, month, or week? Is your revenue steady, or are you losing momentum? Another set of KPIs will help you determine whether you can continue to meet costs during the long-term, but revenue growth lets you get down to basics. If your business is growing, you’re more likely to get a loan or win additional investors. A steady or slowing revenue stream may not have the same opportunities.
QuickBooks and its organizational tools can help you hunt down all of these numbers with much less work than you might expect. Whether you want to strengthen your business or get the numbers you need to apply for a loan, the system will support your search. KPIs are invaluable in today’s competitive business world, but they shouldn’t be a struggle. Armed with this knowledge, you can adjust marketing schemes, improve your funding options, develop sales, and choose the best merchandise for your customer base. The right data makes all the difference.
