The fact remains, however, that your profits are one of the several factors, which affects your company’s balance sheet. If you are a user of QuickBooks CRM for small businesses, your KPIs (Key Performance Indicators) refer to the values used to assess your business’s success in reaching its goals.
Over the course of time, tracking pertinent KPIs can aid you in making critical decisions about your business’s development and growth.65% of businesses adopt a CRM within their first five years.- Software Advice Click To Tweet
Here are 5 most important KPIs to track with the best CRM for QuickBooks online as a small and medium business owner in your industry:
#1. Cash Flow Forecast
Cash flow forecasting is an important KPI that let businesses assess whether their sales and margins are appropriate. To make this forecast, you need to add the total cash your small business have in savings to the anticipated cash value for the upcoming four weeks, and then subtract the anticipated cash out for the same period of time.
Intelligent small business owners using QuickBooks CRM software perform day-to-day cash flow forecasts, whereby they can identify upcoming financial problems in their nascent stages and then make necessary changes accordingly.
In addition to aiding small businesses foresee expected surpluses or shortages in the revenue, a cash flow forecasting is also most vital for proposing upcoming business loan applications, and for tax planning of your enterprise.
#2. Gross Profit Margin as a Percentage of Sales
No small business can achieve success if it is paying more to the suppliers than its gross monthly sales revenue. Gross profit margin as a percentage of sales is a financial expression that illustrates total profit margin of a business compared to its revenue.
Therefore, primarily to find your businesses’ GPM (Gross Profit Margin) divide your gross profit by your sales. Thereafter multiply the result, by hundred and you will then get your businesses’ GPM as a number in percentage.
Next, to determine the extent your GMP contributes to your overall sales turnover, divide that integer with your sales amount.
Here is the math for your easy reference:
( Gross Profit/Sales x 100) / Sales
The usefulness of using this performance indicator consistently is that this KPI helps you to easily quantify how much cash you are keeping against the amount paid out to your suppliers.
The GMP increases as your business retain more cash, and similarly, a decline in gross profit as a percentage of your sales could be a sign that your business is excessively spending on the suppliers.
As a small business owner using QuickBooks CRM accounting platform, you need to reduce overhead expenses or increase the price of your products or services to compensate for the decrease in gross profit as a percentage of sales.
#3. Revenue Growth Rate
It might seem obvious; however, the revenue growth of a business refers to the rate at which a business’s income or sales growth is increasing.
Therefore, to evaluate a revenue growth rate, start by calculating your business’s total revenue for the whole year, which is very easy to find using a QuickBooks CRM platform. Next, divide the current revenue by the total revenue from the previous year to find your present rate of growth.
By calculating RGR (Revenue Growth Rate) as an ongoing process, you can easily assess whether the growth in your business is increasing, decreasing, or is it in a plateau state.
#4. Funnel Drop-Off Rate
The funnel drop-off rate illustrates the number of visitors, who have left your sales funnel, or abandoned a conversion process, prior to its completion.
In a sales funnel (for laymen, envision a sales funnel as a real funnel pointed downward) there are many conversion steps along the way, while the prospects and leads move from the crest of the funnel to its bottom, where the prospects exit or get converted into a sale.
Therefore, the funnel drop rate is the number of prospects that move away from the funnel prior to sale.
To calculate funnel drop rate, begin by calculating the number of visits of a particular sale conversion step and then subtract the number of visits of the first step in the funnel. Next, divide this new value by the visits of the first conversion step.
In the recent times, for users of easy to use CRM software, the funnel drop off rate KPI has become one of the most important performance indicators that businesses must track using a CRM platform for finding growth or decrease in its sales activities.
#5. Accounts Payable Turnover
A business, especially if it is a small business cannot keep its establishment open for long if it runs out of funds to pay its outstanding suppliers. Accounts Payable Turnover is a KPI that measures the rate at which businesses pays for its required goods and services. It reveals the amount of fund spent on the supplying vendors over a given period of time.
Once you are using QuickBooks CRM software, to find this KPI, sum up the cost of your total purchases under supplies, and then divide it by AAP (Average Accounts Payable). Now, once you are aware as a business owner how much you are spending on your suppliers, you can find out if steps are necessary to reduce your spending that can boost long-term profits for your small and medium businesses.
It is impossible to make any adjustment to your businesses’ strategies and procedures if you do not know how your business is trending.
For it is only by tracking KPIs on a regular interval, entrepreneurs can measure the factors, which are affecting their business growth and thereafter make necessary corrections that in the long run gives businesses the best shot at success.