As a CFO, one of the things I do for clients is identify their Key Performance Indicators (KPI’s), which evaluate business performance. For the business owner, it is important to identify metrics that are easy 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.  The CFO 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 their business performance will prove most productive in the long run. As the business owner identifies and utilizes their key metrics, they will have a better grip on the ins and outs of their business!