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Dear David: Tracking ‘true’ business performance

September 3/10, 2018: Volume 34, Issue 6

By David Romano

Dear David: 

I need some help understanding what reports to look at to see what is going on in my store. I am good at staying on top of daily things. I look at my bank balance, try to stay on top of receivables, check out sales reports and pay attention to my profit and loss statement. What else should I be looking at?

Dear Uniformed Owner,

Providing a list of reports and how often you should review them is the easy part. It’s going to be more difficult to convince you that what you are currently doing isn’t very effective.

You’re simply looking at data from the past and reacting to things in the now instead of using that information to create the shortest, most efficient route to get where you want to be. This is more about your philosophy and less about my reporting advice. Nonetheless, here are a few suggestions from your peers who participated in Benchmark Group’s surveys over the years:

Financials. Cash flow should be looked at daily. Accounts receivable (aging and by sales associate), job cost (by sales associate) and open orders (by sales associate) should be checked weekly. Profit and loss (compared to last year and to budget) as well as budget (monthly and YTD comparison) should be looked at by the 15th of the following month. Balance sheets and advertising investment (cost of advertising per new customer) should be looked at monthly.

Sales. Quotes should be checked daily. Average ticket (by associate, store and business segment) and open orders should be looked at weekly. Gross profit and close rates should be checked monthly. Written sales, delivered sales and traffic should all be reviewed daily and monthly by sales associate, store, business segment and vs. goal.

Operations. Customer service (callbacks, average days to resolve issues and money to resolve issues) should be reviewed daily. Claims (by vendor, aging, status, total number, numbers open and closed, and money collected and open) should be looked at weekly. Inventory reconciliation and change orders (per sales associate, crew and money collect and lost) must be looked at monthly.

Merchandising. Sales and gross profit, sales per sales associate, turn rate, aging, open-to-buy, gross margin return on investment and stock performance should all be reviewed monthly.

You’re now probably overwhelmed and realize this list is impossible to track, especially if you assume that only you are the collector and analyst. Remember, you have a team of people to help run your business.

If you allocate each of these reports to the appropriate staff and give them due dates, this is palatable. It is also critical each of the assigned individuals understands they are responsible for not only reporting the data, but also understanding what caused the performance as well as providing suggested improvements. You should also check with your sales reps at RFMS, Pacific Solutions or Rollmaster, as they have all gotten much better at providing this type of reporting.

This leaves you with the most important part of all: You would be required to be an owner and not a firefighter. An owner who believes that preventing fires is more important than putting them out. An owner who believes that proactive is more effective than situational leadership. Being an entrepreneur is already difficult; making uniformed and rash decisions only makes things worse.

David Romano, formerly the founder of Romano Consulting Group as well as Benchmarkinc Recruiting, is currently the director of Dallas-based Romano Group. You can contact David at david@romanogroup.com.