The Top KPIs for Service-Based Businesses: The Metrics You Should Be Monitoring

A business’ greatest assets walk out the door every evening (or log off their computers in a remote-forward world). At some point in your life, you have probably heard this old business adage. For service-based businesses, this is not a metaphor; it’s the truth. So what does this mean when it comes to choosing KPIs for service-based businesses? Let’s dive deeper.

An employee’s knowledge is the actual asset by which a service-based business creates economic profit. Most service-based businesses choose to monetize this asset through some type of labor arbitrage, which is transacted based on a billable hour. In addition to a billable hour, service-based businesses can choose to charge clients many different ways. This includes on a product-type basis (e.g. audits website, blueprints, tax return), value-price basis (e.g. money saved, leads generated, AUM) or periodic basis (e.g. CFO services, subscriptions, memberships) among many other ways.

Although the way a business charges its clients for services provided differs dramatically based on industry, a common thread is that the action(s) of a person are needed to deliver the service. In contrast, product-based businesses can manufacture an inventory that can be stored and delivered over time. For example, a vacuum may be a physical asset of a cleaning company, but it is economically useless unless there is a person willing to perform the cleaning services contracted. You also can’t manufacture cleaning services and store for sale later.

Because service-based businesses vary greatly, addressing top Key Performance Indicators for all of them in one article would be daunting. Instead, I’ll focus on the top KPIs for service-based businesses, such as accounting and management consulting firms, law firms, architects, and the like.

Read the complete article at Beebole.com HERE.