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5 Steps to Providing KPIs to Savvy CEOs

Justin Hatch
Posted by Justin Hatch on Apr 27, 2022 3:05:48 PM

Many companies are going through difficult times as the past years' events have caused a change in the business landscape, causing CEOs to feel blindfolded and bound when it comes to an understanding of their business's direction.

This is a fantastic opportunity for you as an advisor! Let me explain…

Advisors want to provide relevant KPIs to help their CEO clients succeed. So (with good intent), they google, "What KPIs should I provide to my clients?" Or they google, "What are the best KPIs for great reports?"

But it's not quite that simple.

There are tons of software solutions out there that make big promises, but most of them produce a few standard KPIs, wrap them in a dashboard, and claim to meet the KPI needs of the businesses. The actual effect is much less, well, effective. Why? 

Every industry is different.

Each of your client's industries requires different and specific KPIs to help guide its business in that industry. However, most of the KPIs provided by automated solutions are too generic and provide little value to the diverse industries driving the U.S. economy. You might as well stick to the QBO reports.

Instead, clients value tailored content that enables them to survive in today's highly competitive market. They are looking for more insight and are happy to pay for that wisdom.

How do you provide the right KPIs for each client?

Remember, gone are the days of "standard business" KPIs for all clients.

So before you ask google for the top 5 KPIs you should provide your clients, ask yourself the following two questions:

  • What result does my client want?
  • What problem is my client trying to solve?

Asking the right questions helps you provide the right deliverables that will have the most effect on the client. It also opens the communication channels in a great way.

Step 1 - Engage with your client.

I know. This one is a bit of a cliche, right?

1. Before providing a boatload of meaningless, yet pretty, metrics, discover what problems your client faces.

2. By discovering your clients' pain points, you can understand what KPIs you need to develop to help relieve their stresses.

3. Develop a handful of metrics that will impact and drive the decision-making. These focused KPIs draw attention to actions that matter most.

4. Figure out how to measure progress by determining the success criteria for each KPI. 

Remember that KPIs are not the secret sauce and understanding KPIs themselves are not the end-all-be-all. It is the actions that a company takes to move the needle toward the desired outcome that makes the difference. In other words, tracking is essential.

But, beware of measuring anything and everything that moves. Focus on a few quality KPIs that produce the actions that get the ball rolling.

Step 2 - Start small and gain trust.

Your first actions should help your clients experience a few quick wins and increase their trust in you and your data. As the trust increases, you can increase the complexity of your KPIs to enhance your advisement.

Take some time and work with your client to develop metrics, then establish a timeframe with goals. These decisive, action-oriented KPIs will genuinely impact the client's success rate.

Step 3 - Create a collection of custom KPIs that get noticed.

As you continue to work with clients in related industries, invest effort in enhancing your library of reports. Then learn how to best help your clients understand the KPIs and put them to work. Creating a simple yet powerful collection of custom KPIs that your clients can understand will differentiate your firm.

Most of your competition continues to provide generic, one-size-fits-all, automated KPIs. But your clients will literally be observing their business growing.

Remember: Misunderstood KPIs have no value.

Step 4 - Use the right solutions to build reports.

Producing timely deliverables like this might seem time-consuming and daunting, especially in Excel or other programs, It definitely can be.

However, there are solutions on the market that make these reports simple to generate.

Look for financial reporting solutions that don't restrict you to the use of predetermined KPIs. Instead, look for solutions that provide robust indicators that are customizable or give you the freedom necessary for good advising.

The right solutions will literally extend your reach (sorry, shameless pun-plug for Reach Reporting) and save you countless hours.

Remember, quality KPIs increase your value.

One-size-fits-all KPIs no longer fit today's business world. The power to customize tailored KPIs will enable critical decision-making to be done quickly and easily by the management team.

Focusing on the questions, "What results does my client want?" and "What problems is my client trying to solve?" will determine the specific and measurable results your clients should continuously measure and monitor.

Step #5 - Include both results and leading indicators.

Result indicators look back on a period to show progress. Though backward-looking, they are essential for your clients to create forward-thinking goals. Trends can tell a powerful story in seconds.

Leading indicators these KPIs measure day-to-day operational activities, decisions, and adjustments to ensure a well-informed executive team.

Final takeaways on providing the right KPIs to Savvy CEOs.

1. Make sure your clients understand the actions that will improve KPIs.

2. Ensure that a positive KPI result is obtainable.

3. Create KPIs that ignite the proper discussion.

Want to learn more? On May 4th, I am teaching "Financial Measurements Essentials". This is a one-day Power Day where you will learn a simple process for adding value to your clients' decision-making and generating additional revenue for your firm with less than 30 minutes of prep work per client.

But you probably want to know now, are there metrics every company needs to know?

Standard KPIs do exist that all CEOs may want to see. These KPIs or metrics are helpful to see problems at a high level and to start the metric discussion.

14 KPIs that CEOs want to see in 2022

As you discuss your client's current pain points and future goals, it will be clear which KPIs will pop out to drive action for them.

  • Revenue per (employee, salesperson, parking stall, sq foot, rainstorm (you get the idea!)
  • Contribution Margin
  • Revenue % Growth (trend)
  • Gross Profit Margin
  • Net Profit Margin (trend, current)
  • Monthly Recurring Revenue and Annual Recurring Revenue
  • Customer Churn Rate (trend TTM)
  • Employee Turnover (trend TTM)
  • Gross Margin
  • Quick Ratio (Acid Test) (trend)
  • Operating Cash Flow
  • Total Debt to Equity Ratio (trend, current)
  • Working Capital
  • Return on Equity

Providing your clients with reports that help them achieve their business goals will ensure long-lasting client relationships as an advisor they value.

Topics: Financial Advisory


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