You might be thinking that reporting is a tool that is used in large companies only, however small businesses can benefit just as much as them! The main benefit of reporting is insight, an insight that you never would have had before. It may seem a bit daunting at first, with new names and numbers however with the right team you will be able to increase the performance of your business, noticing improvements month by month.
Now the true power of KPI's (Key performance indicators) come into place when you have something to compare it to. This can be previous years figures, flexed figures and so on. By placing current accurate statistics next to other meaningful statistics allows for our understanding to become relevant to the situation at hand. For example if I brought together our Sales for this quarter and compared them to a company like Apple, the outcome of the report becomes completely irrelevant and pointless, now when I compare them to our predicted figures, I am able to determine our performance in comparison to the prediction. This can tell me useful information like if we exceeded, met or fell short of our predicted figures. We can then move forward onto determining what was the cause for the variation.
Why do we recommend reporting?
The insights from reporting are invaluable, even with basic reporting seeing your gross profit and net (operational) profit, for example, you will be able to see how much profit percentage you are making on your jobs from your gross profit and how much your overheads are affecting your overall profit by seeing your net profit. If your net profit is around the 5% mark in the construction industry, this is quite risky and long term survival can be very hard.
A good net profit percentage is around 10-15%, anything more you are doing very well.
This article was written for Saint Financial Group, a multidisciplinary group based in the UK that helps construction businesses develop and grow. SaintFG offers a range of quality solutions in supporting businesses.
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