Weekly Tips: 3 KPI's to Keep Track of 🌡️

As a freelancer or agency to grow your business.

Hey freelancers and agency owners,

To help you close a successful week, we are going to take a look at some numbers (boring I know..). More specifically 3 metrics that are usually not so popular, but important for any freelancer or agency. They are going to be split into 3 areas one in Sales, one in Operations and one for Finance. All of them would help you grow your business. As the saying goes: If you can’t measure it, you can’t improve it.

Utilization Rate 🔨

For this one, we assume that you bill your clients hourly or daily.

You take the maximum possible billable hours for the given month. As the next step, you multiply by your rate to get your Billable Potential. Finally, you divide this number by the actual billed amount in the period.

Utilisation Rate Freelancer= (Max.Hours*Rate)/Actual Billed

Utilisation Rate Agencies=(Max.Hours*Rate* Billabe People)/Actual Billed

If you have multiple rates, you could take your average Rate rather than your desired rate to balance out old ongoing projects.

Why is important: tells us how well we do and where our efforts go. Do we spend more time on non-billable administrative tasks or pitching projects rather than working on clients’ projects? It would also help you spot and prepare for some seasonality during the year e.g busy periods at the end of the year. For agencies, it shows them if they need to hire more people. Generally, everything above 80% is very good.

Won/Lost Opportunities Ratio 📝

This one is a simple calculation: How many projects you won vs how many project opportunities you had in a given period. Important to take project opportunities that you had at least some initial discussion with the client.

Why is important: Says how effective are we at winning projects. Also tells us if we need to make some adjustments in terms of positioning, pricing, etc.
Obviously being at 0% is bad as that means not winning any projects, but some may find it surprising but 100% is also not a good place to be. It would mean that you are in your comfort zone and you could try to spice up things by increasing your rates or going for bigger clients. Unless you are very uniquely and narrowly specialized in a niche or rare technology, I would say 25-50% is a good place to be.

Amount of Delayed Unpaid Invoices 💸

This one is easy to track as most of the accounting software would enable it by default. It mostly affects agencies that have many invoices per month, but freelancers should also keep an eye on it.

Why is important: tell us if our finances are in danger in the coming months. Also, it tells us how effective are we at chasing payments and should we take action to collect our payments.

That’s it! If you have more interesting KPI’s or metrics that you keep track of post in comments. Also, share the newsletter with your friends and colleagues?

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