Without getting into the metaphors, catchphrases, and quotes about data and metrics I think we can all agree that there are a lot of numbers you can follow in your business. Everyone has their favorites and some pundits will promote others, but what you need to do is understand the difference between “nice to know” and “actionable” information. The hard part of this distinction is that the difference is totally dependent on you!
Which KPIs Should You Measure?
Here is our quick summary:
- Actionable Information: Are you going to use the data to improve your business?
- Nice to Know: Are you not going to make decisions based on it?
While both types have value, we think you should spend most of your time focused on the first type.
Here are some questions you should ask yourself:
If you see a client that is 20% less profitable than your other clients, are you going to change your pricing or service model for that client? (To make it fun, consider whether your answer would change if that client is 5% below or 20% above average)
How will you change your compensation model based on the profitability or utilization of your client facing employees?
Are you going to change staffing based on the amount of unused hours you have in a given month? What about in a quarter?
Don't Waste Time on "Nice to Know"
How you answer these questions should drive what data you need. If it is not, then you are spending to much time and resources getting information that is not driving the profitability of your MSP Business Solutions. That is not to say that nice to know metrics are not useful, but they will not put more money in your accounts.
What metrics based questions do you have about your business? Let us know MSPCFO in the comments section.