Business matters
Key Performance Indicators By Carol Gordon, CPA What’s Normal?
If I asked you for the “normal” TPR for your
and key performance indicators (KPIs),
How many times in the last six months have
horse, you either know them off the top of
you’ll be able to make better informed
you heard people talking about things “go-
your head or can get them in a heartbeat
decisions for your business.
ing back to normal? In order to recognize
(pun intended!). TPR gives you a good,
when things are back to normal, you need
quick indication of the health of the horse.
Four critical KPIs:
to know what normal was in the first place.
But what about your business? Whether
A. Cash Balance/Cash Flow:
you are an instructor, have a boarding barn,
Your cash balance is the cash received
I met a barn owner who, when new boarders
are a judge or some other equine-related
minus the cash paid out during the time
arrive at her barn, asks them to provide
business, you need to periodically take your
period – to arrive at these numbers, you
current
business’s TPR.
should be reconciling your bank account
TPR
(Temperature,
Pulse
and
on a monthly basis. Cash flow measures
Respiration) readings for their horse. And if they don’t know how to get those readings,
The business equivalent of TPR is KPI – Key
the ability of the company to pay its bills.
she teaches them. The readings are included
Performance Indicators. Keeping close tabs
A low cash balance can serve as a red flag
on the horse’s stall card and are updated
on your business’s financial performance
that your business is spending more than
semi-annually. She does this for several
is essential to long-term success. Many
it’s earning OR that you aren’t collecting
reasons. If the owner is not present and the
business owners will simply check their
what’s due to you on a timely basis. It is
horse is in distress, she can take the readings
income statement or tax return at the
crucial for businesses to keep a healthy
herself and has a “normal” to compare them
end of the year to assess their company’s
cash balance in the bank to address any
with in her conversations with the vet. And
bottom line. However, it is important to
unexpected expenses or situations or in
if the owner is present and calls her because
look beyond these basic measurements
cases of businesses subject to seasonality.
her horse “just doesn’t look right”, she can ask
to ensure you are getting the full picture
According to a U.S. Bank study, 82 percent
them to provide the current and the “normal”
of
of business failures are due to poor cash
readings to her before rushing out to the barn.
understanding additional financial metrics
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Winter 2020/21 | Riding Instructor
your
company’s
well-being.
By
management.
