Many small business owners struggle to determine what metrics really give them an indication of whether their business is achieving its’ objectives. Quite frankly, discussions around key performance indicators (KPIs) can be pretty scary for people who are not financially inclined.
At Monkey Bizness, I consider KPIs the brains behind what we do. I like to tell people, “we aren’t just a pretty face”. The biggest issue for small business owners is either identifying too many KPIs or not being able to match KPIs properly with business objectives. Below is a quick discussion about four KPIs we use and why they are important to Monkey Bizness.
Average Visits per Year per Customer
This one gets a little wordy but is really pretty simple. How many times a year on average do our customers visit? If the metric is 2, then on average, a customer visits us twice a year. Based on a number of different studies, it is much more expensive to gain a new customer rather than build value in a current customer. This KPI is telling us how well our marketing and other programs are doing in generating repeat business. When we generate more repeat business, we generate more revenue, which is a business objective.
Revenue per Square Foot
This is a pretty popular metric used in the retail industry, and while Monkey Bizness is not the typical retail concept, we do believe this is important. Essentially this metric tells us how efficient our stores are in generating revenue. We sell ice cream snacks from a popular vendor in our stores. The cooler for this snack takes up approximately 5 square feet and generates $4,000 per year in revenue. This product generated $800 of revenue per square foot (we should just fill our store with these!). When you start looking at how to organize your store to generate the most revenue, as an owner, you start to think differently.
Labor Cost as a Percentage of Revenue
Labor is usually the biggest cost on our income statement. When we are inefficient with our scheduling or hire labor at too high of a cost, this percentage will increase. Some of our labor is required (we need someone to open the store and service customers) and therefore is fixed. However, another portion of our labor is variable and can be controlled. For instance, how many hosts do we need to hold a birthday party? Are we training our employees well enough so they can handle the party on their own with a high level of service? Labor is a cost that must be controlled in order to have a profitable business. Therefore, this metric helps us achieve a higher net income.
Café Revenue per $1 of Open Play Revenue
This is a quick metric that tells us how well our food sales are doing. For instance, if we at selling $0.40 in our café for every $1.00 of open play, we know that for every child in our store, we are generally selling a high dollar cup of mocha. This helps us gauge many things in our café include inventory on hand, product mix, and marketing. While not as important as the first three, it does help us calibrate our product mix in our cafes so they can achieve maximum profitability.
While picking the right KPIs is important, it is also important to be able to benchmark them. At Monkey Bizness, we can benchmark stores against each other and have some industry data to help us. If you don’t have the right benchmarks to compare your data to, it can often be hard to know what it means.
If you would like to learn more about franchising with Monkey Bizness, please reach out to us. We love talking to inspiring entrepreneurs so even if you are on the edge about whether Monkey Bizness is right for you, contact us!
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