CHICAGO — Most dry cleaners didn’t open their businesses for the thrill of tracking numbers, but leaders who take the time to measure their key performance indicators (KPIs) have a much better chance of finding success than those who rely on their “gut” and hope for the best.
In Part 1 of this series, we examined some of the most important KPIs that drycleaning company owners should be tracking, and today, we’ll look at ways to start putting a plan together based on data.
Avoiding Data Overload
Because it’s easy to get overwhelmed, experts believe that leaders should have a plan when diving into the data.
“Trying to focus on all the KPIs in the business at the same time just doesn’t work. It really needs to be prioritized,” says Diana Vollmer, managing director of the Ascend Consulting Group. “I suggest they take themost important factor that’s going to make the biggest impact on their business and focus on that one.”
As it becomes a part of an owner’s routine, that focus can then be expanded to encompass more data.
“The basics are always the basics,” says Kermit Engh. who owns Fashion Cleaners in Omaha, Nebraska, and is managing partner of Methods for Management (MfM), a consulting firm for the drycleaning industry. “A couple that I think operators should be focusing on that they may not have in the past are revenue per piece, and CSR revenue per hour. Are these numbers going up, are they stagnant or worse, are they declining?”
By tracking these, Engh believes cleaners are less likely to leave money on the table: “I believe it’s critical that every business collect all legitimate revenue for the work that they do, and these two KPIs are a great indicator if mark-in activities are accurate, and also to determine if you are staffed properly for the hours that are needed.”
While owners can dive as deeply as they wish, Engh suggests taking things one step at a time is paramount.
“Focus on the big numbers first,” he says, “and then slowly get into the smaller numbers that are affecting those big ones if they’re not what you’re looking for.”
Pulling it All Together
Thanks to advancements in POS technology, Engh points out that gathering the data that will make a difference is simpler now than ever before.
“You can create a dashboard that, when you log on to your POS, gives you a blast of numbers, and you can set up how many of those numbers you want to look at,” he says. “My personal dashboard has about 20 different KPIs and takes me about 30 seconds to scan. My production manager has a different set of KPIs that they look at. But it’s much easier now, instead of having to run a report, find the number, then run another report, find that number, and so on.”
Keeping track of financial KPIs, once the reporting elements are put into place, doesn’t have to take up a lot of a leader’s time, Engh believes.
“A budget can be set up in a couple of hours,” he says. “You can do this within QuickBooks® incredibly easily. And then generating the report to see how you’re doing—budget versus actual numbers—literally takes seconds. And then to review and adjust those plans may take 30 to 60 minutes a month, depending upon what you’re seeing, and what new initiatives you would like to correct or develop.”
Engh says that other KPIs, such as production numbers, can also be easily gathered.
“For point-of-sale-generated numbers, these dashboards take a bit of work to put together up front. You need to know what it is that you’re looking for,” he says. “But afterwards, it’s virtually no time at all, except for reviewing a number and making adjustments to correct anything that’s not moving in the right direction.”
Putting KPIs on the Rise
When finding a facet of the business that needs to improve, Vollmer believes that getting buy-in from the staff is crucial. Sometimes, that means making sure the lines of communication are open and everyone has a clear picture of what needs to happen.
“Team members tend to think you’re making a lot more money than you’re making,” she says. “That’s why I’m a proponent of ‘open book’ management, because many think that you’re making a fortune. In many cases, the opposite is true; owners are subsidizing their businesses. So, letting them see the reality of what’s going on makes them understand better why the business has to become more efficient.”
Involving employees in the planning phase is a good way to get better effort, Vollmer says.
“Get the people who are responsible for implementing those goals to buy into it,” she says. “For example, when a manager is given a goal, they should be involved in creating that goal, looking at what the status is now, and looking at what goal is realistic with some stretch effort. It’s almost a negotiation of what that goal number should be, but then everybody should be held accountable to it.”
Come back Tuesday for the conclusion of this series, when we’ll examine how to put numbers into action while making sure how to compare data for the best results. For Part 1, click HERE.
Have a question or comment? E-mail our editor Dave Davis at [email protected].