Saturday, August 22, 2009

CFO Services – Identify Metrics

Helping the business owner identify key metrics to measure business performance is an important CFO Service. I think there is a need for the Part Time CFO to identify metrics that are easy for the business owner to understand and to identify what is critical to the business in the following areas:

  • Sales

  • Gross Profit Margins

  • Employee productivity

  • Advertising effectiveness/Lead generation

  • Overhead

  • Fixed Asset Productivity

  • Interest Coverage

  • Every business/industry needs to take a unique look at the type of metrics that best evaluate performance. What may be an important metric for one business may be totally unimportant for another. Working together with the business owner to identify the critical metrics is the best way to go.

    I also believe that you do not want to have too many metrics. With too many metrics things start to get complicated for the business owner to utilize and understand. Getting the business owner focused on the key metrics to measure his business performance will prove most productive in the long run. As the CFO sees the business owner utilize and understand the metrics presented, the CFO can introduce more metrics.