Danielle Hayden, CEO and founder of Kickstart Accounting, Inc., is joined by Kelsey Chester, Kickstart’s Lead Account Manager, to explore a game-changing topic for your business, specialized KPIs (Key Performance Indicators), and how Kickstart’s CFO services and financial Snapshot help small business owners (like you!) track the right financial metrics for your business in order to support sustainable growth and achieve your goals.
While many fall into the trap of focusing on top-line revenue, Kelsey and Danielle dive into how true financial health comes from understanding profitability, cash flow, expenses, and other key indicators that are specific to your business.
Key Takeaways:
- What are KPIs: Understanding key performance indicators and their impact on business growth.
- Generalized vs. Specialized KPIs: Why customized metrics matter more than one-size-fits-all benchmarks.
- Client Success Stories: Real-life examples of businesses optimizing growth through specialized KPIs.
- Kickstart’s CFO Services & KPI Tracking: How Kickstart’s CFO expertise and Snapshot helps you monitor financial health at both a high level and with precision.
- CFO Services Process: A step-by-step look at how we onboard business owners, set goals, and create financial strategies.
Topics Discussed:
What are KPIs and Why They Matter (00:01:26 – 00:05:35)
Client Case Study: Tracking Every Cost for Healthy, Sustainable Growth (00:05:35 – 00:09:15)
Kickstart’s CFO Services & Onboarding Process (00:09:15 – 00:15:15)
Resources:
CFO Services | https://kickstartaccountinginc.com/the-cfo-solution/
Book a Call with Kickstart Accounting, Inc.:
https://kickstartaccountinginc.com/book
Connect with Kickstart Accounting, Inc.:
Instagram | https://www.instagram.com/Kickstartaccounting
YouTube | https://www.youtube.com/@businessbythebooks
Facebook | https://www.facebook.com/kickstartaccountinginc
Episode Transcript
00;00;00;00 - 00;00;12;16
Danielle Hayden
Hello and welcome back to Business by the Books, the podcast that teaches you how to use your financials to better manage your business. Kelsey, welcome back to Business by the Books.
00;00;12;16 - 00;00;14;10
Kelsey Chester
Thank you, I'm so excited to be here!
00;00;14;12 - 00;00;27;26
Danielle Hayden
So today, we're going to talk a little bit about specialized KPIs and what that means for small business owners. Let's start though with what is a key performance indicator and why does it even matter.
00;00;27;29 - 00;00;50;28
Kelsey Chester
So there's many different types of KPIs, which as you mentioned is a key performance indicator, and they're really important for running your business and making sure that as you grow you do so in a way that's healthy. Sometimes we think more top line revenue is best. However, when you actually get into the nitty gritty of the KPIs like your profitability and things like that, you see that maybe my business wasn't growing in the most healthy way.
00;00;51;01 - 00;00;58;18
Kelsey Chester
And if you're not tracking it on a regular basis, sometimes you don't know until it's really late in the game and it's depleted all of your cash.
00;00;58;18 - 00;01;25;05
Danielle Hayden
High revenue does not mean high profit, and it does not mean high cash. We've seen that over and over again. All right, so all of our clients right now, they all receive the Snapshot. So every single one of our bookkeeping clients receives a monthly snapshot. We've recorded podcasts in the past going in detail of exactly what we look for in the Snapshot, but give us a high level overview of what's in the Snapshot and then we can talk about why, as business owners grow, they might want a CFO
00;01;25;05 - 00;01;26;29
Danielle Hayden
specialized KPI snapshot.
00;01;27;00 - 00;01;51;10
Kelsey Chester
Like I mentioned, there's many different types of KPIs, each of them falling into one of two major categories. Typically one is going to be a generalized KPIs and then one is specialized KPIs. So with our Snapshot you're going to get more generalized KPIs. These are business-wide, company-wide key performance indicators about your business. So a lot of these are going to be gross revenue, cost of goods sold, percentage of cost of goods sold.
00;01;51;10 - 00;02;16;07
Kelsey Chester
Is that within a healthy percentage? Expenses, trends and expenses. Percentage of total income when it comes to your expenses. Is this healthy profitability metrics? Those are going to be the more generalized KPIs that you receive on your Snapshot. However, with our CFO services, you are going to get the specialized KPIs. So this is more detailed into the different sections of your financials.
00;02;16;13 - 00;02;38;12
Kelsey Chester
These are detailed key performance indicators of your revenue. If your business it has multiple forms of revenue and different streams of income, you're going to want to have special metrics for each one of those streams. So what is my percentage of growth for each of my revenue streams? What is where all my money comes in, and what percentage comes from revenue stream A, revenue stream
00;02;38;12 - 00;02;46;15
Kelsey Chester
B? What are the trends in each of the revenue streams? That is going to be an example of a more specialized KPI regarding the revenue section.
00;02;46;15 - 00;03;09;27
Danielle Hayden
What I think I'm hearing overall is that the Snapshot is--I’ve been calling it the CEO dashboard lately and I like that because I think of, you know, what are the very high level things that I need to know, right? Like as a CEO running Kickstart, what are the things that if I am not able to focus into the details, what are all the high level things, which is where I belong as a CEO,
00;03;10;00 - 00;03;34;15
Danielle Hayden
Do I need to know about the business? And then if there's any areas that are trending in the wrong direction or doesn't feel right, I can then go and drill down into those areas with the bookkeeping team. It sounds to me like as we grow as business owners and we add on multiple revenue streams, maybe multiple locations, hiring and growing that we need both, right?
00;03;34;15 - 00;03;54;22
Danielle Hayden
We still need the CEO dashboard. We still need that high level overview that never goes away, right? Like, every single one of our clients, even the CFOs, they get a CFO dashboard. That's that high level overview. But then the KPIs help us drill down into the areas so that we can get really focused on each particular area of the business.
00;03;54;25 - 00;04;13;26
Kelsey Chester
That's right. And I think it's important to note that with our CFO services, the specialized KPIs that we put together are going to be very specific to you and to your business. So a lot of the times, business will come to us with very specific pain points and areas of concern and areas that need focus. So our team puts together specialized KPIs.
00;04;13;28 - 00;04;35;29
Kelsey Chester
This is kind of where we start with those specific areas, so that we can track what is the KPI today? What is the metrics today? What is our goal metric for this area? And then coming up with a strategic plan to get there. I think it's also important to note that specialized KPIs aren't always financial. Sometimes it has to do with cash or invoicing or customer retention.
00;04;35;29 - 00;04;53;20
Kelsey Chester
It's important to know it's not always financial. However, the effects tend to be financial, so we'll use the generalized KPIs to see where the areas of focus are and then go into the specialized KPIs so we can dive into which of those are affecting the generalized KPI that's maybe off track.
00;04;53;21 - 00;05;10;12
Danielle Hayden
That's really interesting. So I want to clarify for everyone, ‘financial’ meaning that it's not just from the income statement, the balance sheet in the cash flow statement. Right. We're looking at your point of sale system or those other areas of the business, not just pulling from the income statement, balance sheet, and cash flow statement.
00;05;10;12 - 00;05;14;03
Kelsey Chester
Exactly. So a lot of those specialized KPIs may be operational.
00;05;14;04 - 00;05;30;05
Danielle Hayden
Now, I get asked all the time when I go and guest on other people's podcasts, what are the best KPIs to look at? And I'm always very reluctant to answer that question because you nailed it. Like, it's not fair for me to come on and say, hey, these are the KPIs you need to look at, because who knows?
00;05;30;05 - 00;05;53;23
Danielle Hayden
What is your goal for your business right now? What industry are you in? What's important to you right now? So can you maybe tell us about a client who has recently come through our CFO onboarding and has gone through our goal setting process, our budget process where you and the CFO team have created specialized KPIs. What was the result of that for that business owner?
00;05;53;23 - 00;06;08;25
Kelsey Chester
Yeah, so like I mentioned before, a lot of the times businesses will come to us with specific areas of focus and just things already happening in their business. So we have one in particular, which I absolutely love, and I'm just so thrilled to see the, I don't want to say turnaround because things weren't going bad, but it was feeling a little bit uncontrolled.
00;06;08;27 - 00;06;22;19
Kelsey Chester
So she is head of a interior design business and staging, and they were growing so quickly and what she provides is unmatched, especially in her area. And she was getting referrals left and right, and she didn't want to say no. She said it. She's like, I can't say no.
00;06;22;19 - 00;06;26;24
Danielle Hayden
Of course, of course. And we know that. We know that problem.
00;06;26;26 - 00;06;45;05
Kelsey Chester
Yes. And to service those jobs, she had to purchase a lot of inventory. And she said, you know, I'm spending a lot of money. You know, some's coming back, but I can't really tell if if more is going out than is coming in. And if the jobs don't keep coming in this fast, what do I do with all this inventory?
00;06;45;07 - 00;07;09;16
Kelsey Chester
I'm spending all this money like it was just feeling a little bit uncontrolled, and she knew there was a problem and didn't know what to do to make sure that her growth was healthy, like I mentioned in the beginning. So what we did is first we need to make sure that her pricing is appropriate. So we had her track--this is a strategy that we do often or an exercise--track 2 or 3 active jobs from start to finish, every single cost that goes into it.
00;07;09;16 - 00;07;32;29
Kelsey Chester
So any special furniture or accent pieces, furniture fixtures, purchases, make sure you track that. Any random supplies track that. Any contract labor that goes into transportation set up, anything like that, make sure you track that. You know, if you're just costing out a job, when you actually sit down and track it, you're incurring a lot of expenses that you really hadn't thought of when you just did an overarching view.
00;07;33;02 - 00;07;41;27
Kelsey Chester
However, when you really track every single cost that you incur, there are things that you didn't think about. Therefore, how could you incorporate that into your pricing? You probably didn’t.
00;07;41;27 - 00;07;51;11
Danielle Hayden
Well, most business owners aren't even thinking about what's going to happen when they do their pricing. It's kind of, “Who else in my area is doing what. Let me price accordingly.”
00;07;51;14 - 00;08;12;12
Kelsey Chester
Exactly. And there's a lot of light bulb moments in our financial reviews where we go over the financials and especially in cost of goods sold, you know, hey, what's in there? Oh, I didn't even realize I was paying for that or I didn't think about that being associated with a client. So that's why having somebody with fresh eyes, independent from your business and has that expertise is so important to have you catch things so much faster.
00;08;12;12 - 00;08;39;17
Kelsey Chester
But anyway, back to the client. So we had her do that exercise and came up with a pricing, I want to say, template, but just a little bit more structure to her pricing and things to think about. Profitability per service offering. So she knew which of her service offerings were most profitable. When you consider all the costs that go into it, sometimes clients are under the impression just because it's not tracked, that your highest revenue service, your, you know, your most expensive service is your most profitable,
00;08;39;20 - 00;08;42;25
Kelsey Chester
And that's not always the case--Not always true. It's incredible.
00;08;43;09 - 00;09;06;24
Kelsey Chester
Yes. It's important to know when that's not true. So we did that. We assessed trends of her sales. We have a healthy percentage guide for her so that she can stay within that for her inventory purchases. So things are still going really well. She's adjusted her pricing. We're looking at her marketing which she doesn't need much, but just kind of having, you know, a contingency plan in case the referrals don't come through.
00;09;06;24 - 00;09;16;13
Kelsey Chester
And just make sure that we're incorporating any referral program into that so that it can sustain the growth as she's experiencing, because she's investing quite a bit in sustaining that growth.
00;09;16;14 - 00;09;41;14
Danielle Hayden
Now, let's talk about when the specialized KPIs come into play. So our clients who are working with us in the CFO capacity, they're going through a longer onboarding process than a bookkeeping client. It's very intentional. So there's a bookkeeping component of this. So our onboarding team is holding a traditional kickoff call where they're getting access to all the accounts, doing a set up in QuickBooks or a catch up.
00;09;41;14 - 00;09;54;05
Danielle Hayden
You know, doing the tactical bookkeeping work. But then our CFO team comes and they get involved. So what does that process that they're going through with the CFO team in order to even arrive at a specialized KPI?
00;09;54;12 - 00;10;10;10
Kelsey Chester
It is quite a heavy lift, and that's okay. It does take time and energy to get your systems in a place that our team can get the information that we need, so that you have the information that you need, and that's okay. We try to take, as you know, a lot of that lift for you. But I mean, there is a little bit of a lift.
00;10;10;13 - 00;10;34;13
Kelsey Chester
So our onboarding process is first we want to get to know as much about you, your business and your goals because a lot of what we do surrounds what your goals are for the business and where your place in the business is and where you want it to be. So we have a series of meetings where we dive into your personal goals, how they relate to the business, over the business goals, not only long term but also short term.
00;10;34;13 - 00;10;50;18
Kelsey Chester
A lot of the time you have a loose plan for the year like, oh, I need to hire two new team members. I need to expand my warehouse. You got to have a general idea of what needs to happen to get the business going. So we'll kind of dive into what the priorities are for this next year, and then we'll do a SWOT analysis.
00;10;50;18 - 00;10;58;00
Kelsey Chester
So this is an analysis of your company's strengths, weaknesses, opportunities, and threats. And we guide you through this process, because--
00;10;58;00 - 00;11;12;09
Danielle Hayden
This is one of my favorite things that we do for Kickstart. Every time we do this it uncovers so much that as a business owner, you're so in the day to day without this process of stepping out and working on your business. There's so much that comes out of this that is so helpful.
00;11;12;09 - 00;11;29;14
Kelsey Chester
It's so true, and it's something that you may not think to do on your own or prioritize to do on your own, but we're kind of that accountability partner to make sure that it gets done. And then we use all of that information: your goals, imminent goals, long term goals, kind of loose plan to get to long term,
00;11;29;22 - 00;11;55;27
Kelsey Chester
the SWOT analysis, all of that. And we create a budget. So we'll plan out the company's next 12 months by month, and we incorporate, like for the SWOT analysis, if there's any opportunities, making sure that anything new that needs to happen in this next year to take advantage of the opportunities that we identified in the SWOT analysis, that that's included. Weaknesses to kind of close those gaps, you know, what needs to happen in the business to close the weakness gaps.
00;11;56;00 - 00;12;26;18
Kelsey Chester
We make sure that that's incorporated in the budget. What can we keep doing to play into the strengths of the business that we identified in this SWOT analysis? We incorporate all of that into your budget, and then we work through it. You know, sometimes it takes a little bit of refining, but once we nail down all the pieces and you have this beautiful budget, and then every time you receive your CFO Snapshot from us, there'll be comparisons of how the business actually performed compared to your budget, so that every single month during our CFO consulting calls, we're taking a look at that budget and seeing where the business is on track and off track, and
00;12;26;18 - 00;12;36;05
Kelsey Chester
then diving into what is making the business be off track in the areas that it is. And those are our focuses, is strategically getting the business back on track.
00;12;36;12 - 00;12;48;28
Danielle Hayden
And this is a little bit different than our traditional budget process. I'm often asked, what's the difference between just a single budget versus actually having a CFO that is involved in your business month over month?
00;12;49;00 - 00;13;12;07
Kelsey Chester
That's right. So with our traditional budgeting service, we plan out the next 12 months and then it kind of stops there. We do give you some comparison reporting so that you're able to see where the business is on track or off track. But there's no re-forecasting with our CFO services. If something changes drastically throughout the year where we need to update, refine the budget, we're able to do that.
00;13;12;07 - 00;13;34;28
Kelsey Chester
We're able to do re-forecasts and do projections with our CFO services. As you may know, entrepreneurship is a journey full of ups and downs and things change all the time, and we want to make sure that what we're providing you is actually meaningful and still pertinent to your business. So as things change, we still want a very clear picture of how the year's projected to end,
00;13;35;00 - 00;13;42;10
Kelsey Chester
so we're able to update that budget every single month if we need to. We usually don't, but--not every month. But, you know, as things happen.
00;13;42;10 - 00;14;08;16
Danielle Hayden
On a regular basis. Yeah, there's something about having that next level of accountability for somebody to be able to see those specialized KPIs and the trends and the details of your business like that, to help you be able to see things before we're going awry. And not every CFO client that comes to the business is a turnaround, like you were saying, or in high growth mode.
00;14;08;17 - 00;14;25;09
Danielle Hayden
You know, sometimes it's just about having the accountability. Like, I love when we have clients who month after month after month, it's just consistency. We're not raising alarm bells. We're not raising a flag. It's not, right, like, okay, we had another great month, and the accountability to say we're still going in the right direction.
00;14;25;09 - 00;14;43;02
Kelsey Chester
It's totally true. And the knowledge and security of knowing you're still heading in the right direction, it can be a role for us too, depending on where your business is and what your needs are for the business, we're here to fill that in with our experience and our expertise, whether it's, you know, just for tracking purposes, just so you have it.
00;14;43;02 - 00;14;54;25
Kelsey Chester
And so, you know, if you have some goals for certain areas in the business and you just want someone to track that without it being you, that's where we come in. Or if you're in full crisis mode, hair on fire, we're here for that too.
00;14;54;27 - 00;14;59;27
Danielle Hayden
Yes. All right, Kelsey, well, thank you so much for coming on to talk about specialized KPIs.
00;14;59;27 - 00;15;02;15
Kelsey Chester
Thank you so much for having me.
00;15;02;18 - 00;15;25;25
Danielle Hayden
If you are a business owner who needs a money team, I invite you to go to Kickstart AccountingInc.com or click the link in the show notes and come and book a discovery call. The Kickstart Accounting, Inc. team and I are here to be a resource for you on your entrepreneurial journey. We want to take bookkeeping off of your plate and help arm you with the information you need to grow and thrive in your business.
00;15;25;25 - 00;15;59;26
Danielle Hayden
Don't wait! Click the link below and let's get started.