Four Key Numbers You Need to Track

Amidst the myriad metrics available in the world of business, we are here to unravel the top four most important metrics to consider, not only to measure your current success but also for the future course of your business. At the forefront stands the most influential figure in your business as the first metric, that is your gross profit. While net profit often claims the limelight, if you are not achieving your gross profit margin, the net profit margin won’t be achieved either.

At PROTRADE United, we refer gross profit as your real income. It embodies what you keep financially after you have paid the expenses associated with delivering a job or a project such as materials, equipment, hire fees, permits and labor. What is the amount that you are keeping after that?

That is a very influential number in many ways. In a different video, you can find downloadable checklist to elevate your gross profit incrementally, catalyzing a transformative journey toward achieving what is most important in your business.

Various factors influence the gross profit such as material costs, the finesse of project execution, business communication dynamics, workflow efficiency, and meticulous scheduling. It is very important to know what your target gross profit is, what you are achieving and how you can improve that incrementally.

Another cornerstone is the volume of advance bookings. This is the second metric. Picture this as your fuel reservoir, its significance evolving based on your business type, spanning from days to months ahead It could be five days in advance to twelve or eighteen months in advance.

Picture your business as a vehicle on a journey, its fuel gauge indicating the distance you can comfortably cover. Just like a road trip, having a sense of how much fuel you have left is crucial. For service and maintenance businesses, one to two weeks booked in advance might be ideal. On the other hand, for larger construction undertakings, a 12 to 18-month booking window signifies a substantial reservoir of work and fuel.

Without this knowledge, how do you know if you are in a precariously lean situation? When it’s getting lean, a reactive marketing is preferred. The work pre-booked in your calendar, acting as your reservoir of opportunities.

The third number, we call it the ‘magic number.’ This embodies the quality leads and inquiries your business wants to attract to fuel your revenue and most importantly your profit goals for the next 12 months.

Not all of those inquires and leads are ideal for your business. Many considerations are imperative to contemplate. How many of those inquiries leads to quote, or pricing or proposals? What percentage of those proposals do you actually win? And among those proposals, how many do you start, complete, invoice and get paid to hit your revenue and your profit goals? So, the ‘magic number’ is a figure that encapsulates the sum needed to fulfill your bottom-line goals. Without this figure, how can you know if you are on-track or off-track?

The fourth number is the net promoter score. It is a gauge of customer satisfaction, reflecting the resonance of your deliverables. A valuable metric that is both easy to ask and measure. This score operates on a scale of zero to 10, asking customers how likely they are to recommend your business to others. This feedback provides insight into customer satisfaction. A lot of number of ways behind the scene that can influence this number. What you do is you start to gather that number to measure your customer satisfaction, then you can manage and respond accordingly. The higher the number, the better.

In summary, to bolster your business acumen, focus on the four crucial numbers: gross profit, booked work in advance, your magic number, and the net promoter score. If you’d like some support in how to track, measure and manage those numbers within your business, please reach out to us and the team at PROTRADE United.

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