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Last Update: Monday September 20, 2021

Key Idea: Create A Key Indicator Report

JIm Schell wrote the book, "Understanding Your Financials," and he suggests that some numbers, key indicators, are more important to you than other numbers in your business.  More...

Key Question:


No.  While every number can be useful, you can focus on a few numbers.

Q: What's the difference between the financials and a key indicator report?

A: Mainly format. Accounting can be complicated and that's why there are nearly half a million CPAs in the US and who knows how many bookkeepers there are. Financial statements follow a uniform template which is great for bankers and others who need to use financials to make decisions. However, Jim is suggesting that all numbers are not equal and depending upon where you are right now, you should customize the information derived from the financial statements to make the data more useful and motivational.

Q: What number was Jim questioning Nani about and should that number be her top key indicator number?

A: He was hammering her on gross margin which she says is only 25%. In the interview material that did not make it into the show, Jim insisted that Nani change her bid sheet and keep changing it until her gross margin gets up to 40% And, he said she needs to focus only on gross margin until she sees 40% on a regular basis.

Think about it

Are you willing to create a key indicator report? What will your key indicators be?

Clip from: Learn to Use Your Financials; Track your Numbers

USA and around the world:  Let us all get our houses in order!  Keeping track of business... it is the job of everyone in a business  The best way  to do it is to read, grasp and act on those monthly financial statements. If you share that information and give everyone bottom line accountability through the key ratios, your business will rally. You'll see an impact immediately!

In this episode you meet three small business owners. Two have gotten control of their financials and one is working to do better.

Unfortunately, most of us do not work closely with our financial data.  We all must.  With all the features built into today's accounting software programs (be sure you have your latest upgrades), any owner should have the numbers they need to run their business with the push of a button.

Opportunity Knocks

Jim Schell, Founder / CEO

PO Box 9073
Bend, OR 97708
541 317 9490

Visit our web site:

Office: 541 317 9490

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Year Founded: 1999

Create A Key Indicator Report

HATTIE: (In the Studio) Jim teaches business owners to develop what he calls key indicators. He has 11 generic key indicators that work for every business but he also has each owner come up with ones that are specific to their business.

JIM: Each month you're going to generate a cash flow statement a P & L balance sheet and a key indicator report. What is a key indicator report? It's just what it says. You're going to pick anywhere from 8 on up key indicators that are peculiar to your business. When I say 8 on up, the key indicator report is a living breathing document. The key indicators may change as you grow and different things happen. So first remember a key indicator is not generic and it's different for your business than it is for anybody else's. Basically what it does is capture the key percentages, ratios and relationship of the numbers that come out of your P & L, balance sheet and cash flow statements.

HATTIE: (Voiceover) This is Jim's generic list of key indicators. From Your P & L you get...

1. Profit for the Month

2. Profit Year To Date

3. Sales for the Month

4. Sales Year to date

5. Return on Sales Year To Date

6. Salaries and Wages as a Percentage of Sales

From Your Balance Sheet you get...

7. Current Ratio

8. Debt to Equity

9. Inventory

10. Accounts Receivable

11. Percentage of Receivables over 60 days

HATTIE: Chris, what do you consider to be your key indicators? What numbers tell you if you're doing good or bad?

CHRIS: The way inventory is selling versus the previous year. Accounts receivable for sure. The collection on that.

HATTIE: So accounts receivables. Inventory. What about sales?

CHRIS: Definitely sales. Daily sales through the register and the way our employees are scheduled. What work we can get to. People come in and schedule us.

HATTIE: How often with the new system you've installed do you look at your key indicators?

CHRIS: We look usually, if not daily, depending upon my work load,at least once a week.

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