A small electrical service business owner probably has a vision and ambitions for their business. However, you need to carefully plan your path to success in order to turn this vision into a reality. In order to see your small business flourish, it is important to set goals. Results-driven business leaders understand and need to know what results they want to achieve.

It is the right time to consider overall success metrics and ratios related to your electrical service business as a new year begins. This type of measurement is also referred to as a key performance indicator (KPI). Keep in mind that KPIs are important for measuring and evaluating the success of small businesses.

A business’s key performance indicators provide a lot of information about its health and financial success. You have to know how to keep your finger on the pulse of your business in a competitive market, such as electrical service, in order to manage a small business effectively.

Do you know that many people tend to associate KPIs with numbers alone? KPIs can also be qualitative in nature. A KPI provides the most important and vital performance information, such as profitability, that allows business organizations to identify whether or not they are on track toward their stated objectives and goals.

Essentially, KPIs help businesses translate high-level and strategic goals into various actionable tasks with measurable results.

In order to evaluate where your business is doing well and where it can be improved, you should focus on several KPIs and key metrics. In order to track performance, however, you need to choose the right KPIs.

KPIs are measurements, so people naturally assume that they should always be numbers. Don’t forget, however, that evaluations, particularly of service or customer experience, generally go beyond numbers.

Sales Revenue

Do you meet all your sales goals and objectives? Sales revenue is the amount of money you make from the sale of your various electrical products or services. It should be remembered that this is a core metric that any company in this industry needs to stay in business. Revenue trends should always be monitored. As an example, you can compare current revenue with past revenue.

In the absence of this, it is difficult to interpret various trends in profit. There is also no way to tell if you are on track with your current business goals in terms of saving, spending, and earning.

Peaks and slow periods are common during certain seasons. How often do customers call you for air conditioning repair or appliance repair?

Understanding and anticipating these significant trends will enable you to keep competitive pricing as well as make long-term and strategic financial decisions to ensure profitability.

Specific Expenses and Service Costs

The KPIs you track must include your total service costs. Check how much of your service technicians’ time you bill directly to your customers, for example.

Be sure to compare your revenue report with your expense report. In addition to tracking the money coming into your business, it is important to know how much money you are spending.

It can be one of the most important numbers when you’re trying to keep your costs low. From the payment of employees to the purchase of materials and supplies, expenses can include a wide range.

Cash Flow

Cash flow is one of the hardest concepts for many small business owners to grasp. Cash flow refers to the amount of money that comes into and leaves your business over a specified period of time. It is also important to note that your cash flow statement shows how much cash is available at the end of the period.

Despite your P&L statement showing consistent profits, you may still have problems with cash flow. Maybe you invoiced a major project, but the payment term is 60 days.

You won’t have cash in hand for awhile. Your expenses, such as rent, may be reasonable based on the income you earn. Nevertheless, if you have to invest a great deal of money in equipment while you wait for the cash to come in, you will not have enough money to pay for the equipment.

Profit Margin

Using the formula: total sales revenue minus the cost of rendering services, divided by sales revenue, you can calculate your gross margin. You can track the growth and success of your electrical service business by tracking the gross profit margin, expressed as a percentage.

Every dollar of your revenue that you retain as profit is represented by this percentage. Thus, a high percentage indicates excellent efficiency. In contrast, a low percentage means that productivity needs to be increased.

Payroll or Workforce Management Reports

Payroll reports must be built on a robust system. Knowing how much you spend on your employees is essential to optimizing your business. It is crucial for small business owners to understand when they need more employees and when they can manage with fewer employees.

Creating payroll reports also ensures you are on top of everything from accurate work hours to tax preparation. The reports may also include information on employee details, total pay, payroll contributions, and time activities for all employees.

Response Time

In a day, the more work your technicians can perform, the quicker they will respond to problems and issues. Additionally, the earlier the customer’s problem is solved, the happier and more satisfied the customer will be.

Monthly or Quarterly Profit/Loss

Your monthly or quarterly profit (or loss) is calculated by subtracting fixed and variable operational costs from your gross profit. A fixed cost, such as rent, is one you pay each month. In contrast, variable costs, such as fuel costs, fluctuate from month to month.

Technician Utilization – The time spent on aspects of a technician’s job description versus time spent completing timesheets, attending meetings, and other activities that are not related to productive work can be tracked.

Customer Retention

Customer retention is an important KPI without a doubt. Attracting new customers is costly as well as time consuming. For example, you might need to create engaging social media posts and offer discounts to get people to call for an estimate.

You should also consider your customer service practices and implement retention campaigns (like discounts) if your small business depends on several low-scoring, one-time customers.

Website Traffic Report

Your electrical service business’ website traffic is an important aspect of running it. You should never ignore it. You need to do your best to take your business digital even if you are unfamiliar with modern digital marketing.

Referral reports, for example, can provide you with valuable information about how your online strategy is driving traffic to your site. Local businesses require a strong internet presence today, it’s no secret. According to BrightLocal, 97 percent of consumers find local businesses online.

Accounts Receivable

Providing your electrical services on credit is an excellent way to gain an edge over your competition, isn’t it? You should also consider how credit financing affects your cash flow from a bird’s eye view.

You should look at your accounts receivable if you often find yourself with alarming P&L numbers. Late or unpaid invoices are usually the cause of small business owners’ financial distress.

Budgets vs. Actual

As its name implies, this report compares actual results, mainly from the Income Statement, with the budgeted amounts that you projected at the beginning of the period. It allows you to evaluate whether the financial forecasting projections in your budget match the spending and revenue generation of your business.

Setting SMART goals is crucial when determining which metrics and KPIs to track.

• Specific – A specific goal is one that is unambiguous in what it aims to accomplish. Everyone knows what, who, where, and when the goal is.
• Measurable – It is clear how to measure and track your goal and your desired outcome. Every maintenance goal should be able to be assigned one or more maintenance metrics.
• Attainable – This means that reaching the goal is reasonable and realistic.
• Relevant – The goal ties to your overall business values and objectives.
• Time-Bound – You should have a clearly defined and realistic timeline to create a sense of urgency.