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Business metrics

Discussion in 'Business Operations' started by snomaha, Apr 24, 2011.

  1. snomaha

    snomaha LawnSite Senior Member
    from midwest
    Posts: 857

    What are people using to measure business?

    Rev per employee

    A/R turnover

    sales pipeline

    cash flow forecast

    gross profit per labor dollar

    rolling 12 P&L
     
  2. umsco226

    umsco226 LawnSite Member
    Posts: 30

    It depends on what you mean by rev. per employee. It's tough to determine how effective they are on their hours worked, as my employees generally aren't working alone. In terms of sales though, we definitely calculate it.

    I measure sales per employee, profit as a percentage of sales per employee, sales per square mile, profit per square mile, sales per commodity (ie:aerating, dethatching, cuts, etc.), profit per commodity.

    That's to measure my advertising and employee values. To find out how the business itself is doing, I find my current ratio (assets/liabilities), return on assets (net income/avg. total assets), accounts receivable turnover (sales/avg. accounts receivable).

    And to measure my effectiveness in collecting payments, I find out my avg. collection period: Accounts Receivable / (Annual Credit Sales/365).
     
  3. snomaha

    snomaha LawnSite Senior Member
    from midwest
    Posts: 857

    I get rev per employee by taking total hours worked (salaried, admin, direct labor) divided by 2080 hrs. I look at this on a monthly basis using a rolling 12 profit/loss statement. Sounds like the same thing you call sales per employee?

    We also track A/R turnover or what our accountant calls day sales outstanding. We track a rolling 2 month on a weekly basis- AR/sales X number of days in the 2 month period. If we can keep that number below 30 days we typically don't need to use our line of credit - on the flip side every time that number has hit above 45 days we dip into our line and usually uncover a service issue or have not followed our process for A/R calls.
     
  4. snomaha

    snomaha LawnSite Senior Member
    from midwest
    Posts: 857

    Sorry - we then take the number of full time equivalent employees and divide into total sales.
     

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