Currently, SMEs face challenges such as inflation, the expectation of a recession and international trade tensions in different regions globally. In this context, it is essential that they know the types of indicators that must be measured and develop financial planning designed to be able to face different types of situations.
What are performance metrics and why are they necessary?
This type of data are measurements that allow a financial diagnosis, determine the relationship with customers, suppliers and the market in general. They also provide valuable information on aspects of improvement and allow future projections to be made.
Performance metrics are an indispensable tool if you are looking to diversify, expand a business or increase its profitability.
In relation to the above, it is estimated that only 50% of the companies in the country have financial planning.
Similarly, the study Radiografía del Emprendimiento en México found that, in 2021, 35% of the failure of ventures could be attributed to a lack of liquidity and 29% to mismanagement. This is precisely the meaning of defining and analyzing quality indicators that allow a company, especially SMEs, to maintain themselves over time.
Types of quality indicators that you should measure in your company
Depending on the business objectives, some of the following indicators should be considered:
1. Commercial and customer satisfaction
These reflect the degree of customer satisfaction throughout the shopping experience. Among the most important we can mention: the cost of customer acquisition, which refers to the value that must be invested in marketing and sales processes to acquire a new customer.
2. Financial
They are indicators that verify the first objective that SMEs must meet: guarantee financing that allows them to cover fixed and variable expenses, as well as achieve stability and ideally sustained growth over time. These may include:
- Sales. It is an indicator that is used to control weekly, monthly or yearly billing.
- Utilities. The priority based on this indicator is not that the business achieves many sales, but that the greatest possible difference (margin) is generated between the sale value and the cost of sale.
- Cash flow. It refers to the calculation of the resources that enter and leave in a specific period. This indicator allows knowing the financing needs required to maintain operations.
3. Human resources
These indicators measure the performance of the staff and allow conclusions to be reached about their relationship with the company.
- Work absenteeism. It is the percentage of absences from work during a given period. When the number increases, it is possible that, in some aspect, the collaborators are experiencing dissatisfaction.
- Productivity. The financial health of an organization also depends on each of its members reaching the minimum levels of productivity to be profitable. Hence the value of this indicator.
- Rotation levels. It is the average time that employees remain in the company, considering resignations and dismissals. Once the level of turnover is clear, steps must be taken to reduce it in order to avoid the added costs of training and adapting new staff.
Pymes Capital: the financing option to grow your business
At Pymes Capital we provide you with adequate alternatives to finance, provide stability and expand your business, transforming challenges into opportunities.
Cash advance through future sales type of financing is a great way for SMBs to finance their operations and further their future growth.
- e.economia.gob.mx/guias/financiar-la-empresa
- www.eleconomista.com.mx/el-empresario/Que-retos-financieros-enfrentaran-las-pymes-durante-el-2023-20221227-0046.html
- https://www.youtube.com/watch?v=LOS9PfXRR1E