Accounting at its core is based on historical data. Transaction entry for most small businesses is at most caught up through the prior week, but it is never forward-looking. It is vital to review the trends shown by your historical data and review key metrics that pertain to your industry. See this article for our Top 5 KPIs for the interior design industry.
Key Performance Indicators (KPIs) play a crucial role in evaluating the financial and operational health of any organization. While some KPIs are universally applicable, others are industry-specific. In this article, we will delve into the top five KPIs that hold significant importance for the interior design industry. By monitoring these metrics, design firms can gain valuable insights and make informed decisions to enhance their overall performance.
There's an illusion out there that you can simply look at your bank balance and judge how healthy your business is. While that may be somewhat true for select businesses, it is certainly not true for interior designers. One of the most common questions we receive is how much cash on hand is really mine and how much is client funds?
What is the maximum amount of revenue you can generate based on your current processes and systems? This answer to the “Maximum Capacity” question should serve as a target for you before making any changes within your business. It also serves as a gauge of when to ramp up staffing and beef up your internal systems and processes.
In today’s post, we’re going to review the concept of a “burden rate” and why it is important. This term may have differing names by industry or have varying calculation methods, but the underlying reason for doing it is the same: you must know the cost it takes you to produce revenue. Let’s look at an example to illustrate this point.
Most businesses rely on credit cards to make daily purchases in their company. From inventory to supplies, materials and advertising, almost every purchase makes it on the company credit card. It’s a convenience most people rely on, but it has its challenges as an organization grows. It can be tedious to keep up with all the transactions, but this is vital for the owner to have accurate and up-to-date financial reports.
The other challenge is oversight with the team. There are four areas that should be considered for your credit card policy.
In its simplest terms, a budget is a realistic estimate of future revenues and expenses. This is an important exercise for a business to do at least annually just prior to the new year. Budgets should include your normal operating revenues and expenses, but also factor in capital improvements, staff additions, infrastructure investments (like software or equipment), and other long-term purchases. A great budget allows the team to plan future expenditures that align with the mission and vision of the organization.
Before technology and credit cards ruled our lives, cash was king. It was simple to not spend more than you had because if it wasn't in your wallet, you couldn’t spend it. The “envelope system” became a great way for those struggling to get out of debt to plan their monthly expenses and climb out of the financial hole. After receiving a paycheck, you would cash the check and then place money into each of your envelopes representing a segment of your expenses. Examples of envelopes for an individual may include: mortgage, utilities, savings, insurance, and general purchases. The result is that you take control of your money and plan out your finances instead of being a slave to debt. The same can be done in a business!