The question Every Business Owner asked

Last week I was invited to speak to a group of established Irish business owners about how to use monthly numbers as a proper management tool to steer their business not just a compliance exercise.

Different sectors. Different sizes. Different challenges.

But every single one of them asked the same question.

"What KPIs should I be looking at?"

It's a reasonable question. And the usual answers are reasonable too. Sales. Gross margin. Overheads. Profit. Cash. These matter and they should be on every monthly dashboard.

But here's what I said to the group that shifted the conversation.

The reason to have KPIs isn't just to look at another number each month.

A KPI should do one specific job: tell you a problem is coming before you see it in your sales or profit figures.

By the time a problem shows up in your profit number it's usually already three or four months old. You just couldn't see it yet.

The most valuable indicators are the ones that show you early at a time when you still have time to do something about it before it gets very expensive.

I call these leading KPIs, as opposed to the lagging ones most businesses focus on.

Here are three I rarely see businesses measuring but almost always wish they had been when I look back through their numbers:

Customer churn. Most businesses track new customers carefully. Very few track what percentage of existing customers stopped buying each month. If churn is growing, it won't show in your sales figures straight away and especially if new business is masking it. By the time it does show up, you've lost months of time to understand why and do something about it so that it doesn't keep growing.

Quote and proposal conversion rate. If the percentage of your quotes converting to sales starts to fall, that's an early signal of pricing pressure, of a shift in the market, of a competitor doing something differently or maybe an internal problem with your proposals. Watching this monthly means you catch the trend early. Missing it means you find out when you see the decline in sales and ultimately in cashflow.

Debtor days. How long are your customers taking to pay from the date you invoice? If this number is creeping up each month it's worth understanding why before it becomes a cashflow problem. Sometimes it's a process issue on your side. Sometimes it's a signal that a customer is in difficulty. Either way, earlier is better.

None of these are complicated to track. But they need a decision to include them in what you review each month. Most monthly packs don't have them because nobody asked and teams continue to report what they've always reported.

The businesses that navigate difficult periods best are almost always the ones that see problems coming early enough to respond rather than react under pressure.

So start by taking a look at your most recent financial reports and ask "Are these simply giving me historical information or are they actually alerting me to a financial risk that we need to address quickly?"