Your Revenue Analysis and Revenue KPIs

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Profit Drivers for your financial control

What you measure and what you report have to makes sense your business, you strategy and to you. Monitor the indicators that make the difference to be able to make informed decisions. If you measure the right things and you use the right reports, your cash will flow! Here are examples of drivers to measure, when and for what purpose, and also when to ignore them.

Your Revenue Analysis and Revenue KPIs

Small businesses are and should be obsessed with sales. That is one area where data is available, updated and clean.

We analyse your invoices to identify the categories of revenue which reflect your strategy best. The grouping will help us segment your market and propose your first performance indicators.

Revenue / Billed Day

If you offer professional services, your core unit of measurement is time. This indicator tells us how confident you and your sales persons are in the value of your services. It also measures clients’ perceived value in your service. It can spot changes in your market, such as pressure to push prices down.

When to use it: constantly, as it will also determine your profit margin per client and per service offered and your strategy

When to ignore it: never

Revenue / Project

This indicator tells us about the need for project-based team structure in your delivery.

When to use it: at the end of the year to check trends, but it does not say much unless your projects are fairly standard

When to ignore it: if you have established a solid reporting of Revenue per Billed Day for all types of services you are offering as you can derive it from there.

Revenue / Client

This indicator tells us about your sales efficiency and marketing positioning. It also indicates the size of budgets your services attract. If they vary wildly, we will need to know why.

When to use it: when checking your account management activity and when using different channels of distribution. This indicator is useful when you compare it against the clients’ budgets for your service to check your ‘share of wallet’.

When to ignore it: probably never, as you want to know whether you are growing inside your clients or they are showing signs of slowing down; it forms the basis of client churn calculations and gives you warning signs

Revenue/Employee

This is a classic. It depends on your industry and level of maturity of your business, but as a rule of thumb you want £100 000 per full time employee.

When to use it: when someone suggests you should employ more people

Revenue per reference unit used by your market

This indicator is the one that your competition and market uses frequently to refer to your services. It can be the price per project, per course (if your core service is training sessions) or a flat fee per survey (if your core service is market research).

When to use it: useful to monitor as long as you have access to benchmark information from your partners and competitors

When to ignore it: when you notice that the benchmark information includes too many different variables – different length of courses, different sizes of the group, different type of assignments

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Profit Drivers for your financial control