KPIs Part III:  KPIs For The Product Based Business

Ready for round three of our basic KPI Series?  This one is for the product based companies interested in which metrics are best for them to get acquainted with.

For businesses that are product-based, there are particular data points that can reflect the company’s health. Are your costs and revenue at odds? Is your brick and mortar shop outperforming your web orders? Is inventory shipping efficiently? By double-checking these KPIs, product based businesses should have a better idea of where they stand and what to tweak for optimal outcomes.

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Companies that are product-based may have more predictable supply and demand time periods, but a single error can throw a wrench into financials months down the road. Keeping a close eye on costs and variables can make recovering from mistakes bearable, but more importantly, an engaged owner and accounting team can pinpoint slices of the company’s financials that are worth a second look for growth.

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KPIs for the Product Based Business

• Sales by Channel (i.e. Wholesale vs Retail vs Distributor OR Online vs. In Store): Assigning revenues to particular channels to see differing income performance
• Product Lines as % of Sales: Dividing sales among product lines to see differing income performance
• Gross Profit % by Location and Product Line: Revenue minus the cost of goods sold, sorted by locations or product lines to see differing income performance
• Freight and Delivery as % of Revenue:  The cost of freight and delivery in relation to the total revenue
• Full Price vs Discount %: The percent of sales that were at full price versus those discounted.
• Inventory Turnover: The measurement of how often inventory is sold and replaced
• Average Inventory Cost: The cost of inventory that the company has on hand at the end of a particular time period, averaged over time (for example, monthly costs averaged over a quarter)
• Average Inventory Retail: The retail value of inventory that the company has on hand at the end of a particular time period, averaged over time (for example, monthly values averaged over a quarter)

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Ready For More Metrics?

If you are getting excited about how these metrics may help you on the path to success, we’ve got you covered.  We wrote an entire eBook on the subject of setting a product or inventory based company up for success.  Inside you will learn other key metrics to review; from sales channel specifics, to analyzing margins of all shapes and sizes.  We promise, it is all easy to read and digest, even if you aren’t a numbers obsessed accountant like us.  There are also pictures to help you visualize all of the intense accounting concepts.

The Time Is Now

At the end of the day. If you have trouble understanding your company’s KPIs or what the numbers might be able to tell you, we can help guide you.  Accountfully has worked with companies of all types to identify pain points and thoughtfully re-orient companies on better paths to success. Giving business owners the resources to track existing KPIs is critical to the success of businesses large and small—and the economic ecosystem surrounding them. With data in hand, you can make decisions on attainable objectives that represent success and sustainable growth. 

Feel free to set up a time to chat if you would like to see how we can help your unique business situation.