Running a Small business is a lot like Photography
Sounds crazy, right? I just saw a photo of a hummingbird in flight, one of those taken with a very high shutter speed to capture the wings in flight and droplets of water in a stunningly beautiful image. I’ve taken a few of those, and always consider myself fortunate. Even though I do all the right things – set the shutter and aperture for the conditions and desired photo, etc – it seems that they still only sometimes turn out right.
Even when we do everything right, there are variables beyond our control – at the instant you hit the shutter release on the camera, the wings aren’t in the right spot, for example. Or a cloud comes in unexpectedly and changes the light. Or someone opens the door and scares off the hummingbird.
In business, many times you’re doing all the right things and still can’t seem to get the desired results. You can have a great product, be responsive in your phone and email protocols, and so on, and still have a hard time closing the deal. Or maybe you’re getting great results but you’re not sure why (like using the “auto” setting on the camera). I once read that to get the 12 photos you see in a National Geographic article, the photographer took thousands of photos, most of which didn’t turn out. Some turned out well but just weren’t right for the article or the situation. Similarly, in business, it can be a numbers game where you need to just get your name and product out there so many times that eventually the numbers work out. Maybe the customer loves what you do, but the timing isn’t right.
Small business accounting and KPIs
What does this have to do with accounting? Well, one thing that you can do is use metrics, or Key Performance Indicators (KPIs) to measure your performance. Whether it’s number of ad impressions seen, clicks on your website, sales calls made, brochures passed out or some other KPI, there is always a correlation between the actions taken and the results seen. KPIs can tell you that if you make X number of calls, you’ll get a sale – it stands to reason then that if you want 3x the sales, you need to make 3x the number of calls. Each business has it’s own KPIs whether you’re tracking them or not, and if you’re not tracking them you’re missing out on an opportunity to understand your business on another level. KPIs can be used to evaluate your sales staff, for example, and to help them see what’s working and what’s not. Not everyone on your team understands your business like you do, and KPIs can help you show them the way.
If you’re not already tracking KPIs, working with a CPA like Randy Clark can help you identify what to track, set up a method for tracking, and assist with the measurement of the relationship between KPIs and financial results. Sales don’t just happen, and accounting is a reflection of the business’s activity, so having the right tracking and right accounting is key to monitoring your business in good times and in bad. Our office in Kent serves Renton, Des Moines, Tukwila, Federal Way, Burien, and the Seattle area. Give us a call today at 253-234-5732 to find out how we can help.