In previous columns, I shared some of how John Gagliano used key performance indicators (KPIs) to build a business that included more than a dozen Collex Collision Experts shops that he was able to sell in 2014 for about $45 million. Here are a final few key takeaways from what John told me about using KPIs to build and manage his business.
Use KPIs to monitor receivables. John said one of the powerful things about KPIs is they help you pinpoint where in the business there’s a problem that needs to be addressed immediately.
“We tracked our receivables at each location, and if we had a shop where the receivables exceeded 45 or 60 days, we knew there was something going on,” John cited as one example. “It generally meant there was a problem with the way those guys were closing the repair orders, such as closing jobs without authorization from an insurance company.”
Without tracking and monitoring KPIs, he said, you might know at month-end there was a problem with profitability or cash flow at that location. But it might take you time to determine it was a receivables issue – rather than some other cause – that you needed to address.
Use KPIs to give real-time feedback. John said KPIs are ideal for managing millenials and other workers who thrive on regular feedback. He cited his own recent experience at a gym as an example of how younger generations are more attuned to real-time data. A guy on the next machine over at the gym asked John what his heartbeat was, and John was initially baffled.
“For my generation, how we are doing at the gym is based on sweat,” John said, laughing. “Now there are monitors tracking distance, time, calories burned and heart rate. All I really had to do was look down to see all that on the machine.”
KPIs give those feedback-hungry workers the real-time inputs they crave, just as a Fitbit gives a runner data on how they are doing.