Moving into an advisory role means asking your clients the right questions and tracking the right key performance indicators (KPIs).
Your first step as a financial advisor should be asking your client one simple question: What is most important to you?
- Making sure your employees get paid?
- Maintaining an average revenue per client?
- Growing your list of referrals?
- Staying above a certain balance in your bank account at all times?
Asking these initial questions will make it easier to track the appropriate metrics. In addition, it will help guide your client’s business toward its unique goals.
What Is That One Thing?
The key to a successful client-advisor relationship is simplification. In the business advisory world, there’s an oversupply of information to consider for each client, but 90% of it isn’t relevant to their exact business model. Determining the one (or two) things your client cares about most helps you track the right data. As a result, the client can lean on you for advice without feeling overwhelmed by unnecessary information.
For example, your client may prioritize utilization of full-time employees (FTEs) over total net profits. Knowing this, you can cut out the noise and focus on what your client cares about. Out of the 10 data points you were originally tracking, you may only need two.
Graphs Are Universal
Straightforward communication goes hand in hand with clear metrics. One great communication tool? Visualization. Your client’s FreshBooks dashboard automatically reflects exactly what matters most to them. Plus, the information is presented in an eye-catching graph. For example:
- When your restaurateur client logs in to their FreshBooks account, they can immediately see what their margins are
- Your attorney client can see outstanding revenue, which invoices are overdue and the total dollar amount
- Your marketing firm client can see which revenue streams are performing best, total profits and spending
All of these data points can be presented in clean, user-friendly graphs. Certainly, a line going up is universal, no matter what the metric is.
Reporting Live From FreshBooks
Once you know which metrics your client is most passionate about, you can offer informed advice. Whether that’s forecasting and budgeting, hiring more employees, wealth management and investing, or wherever else you see opportunities for improvement.
Using the unique data gathered above, FreshBooks reporting provides valuable insights in a clear, concise, nice-to-look-at aesthetic. Better yet, it’s all customizable. The reporting can be easily modified to reflect the exact needs of your client. Even more, you can integrate with one of the most robust dashboard tools on the market. Malartu, one of our program app partners, makes any calculation possible through its custom metrics, which can be easily integrated with our platform.
FreshBooks reporting is also a great option for clients when they need to meet with investors or talk to their bank. The reporting process is accessible at any user level and the end result is a presentation-ready statement.
From a Reactive Mindset to a Visionary One
As an advisor, you’re always looking toward the future. Asking clients what they want their business future to look like will quickly dictate the steps you’ll take to get them there. We know key performance indicators (KPIs) are necessary to track progress, but asking what matters most to your client will determine which ones to focus on. So we’re listing some of the most common KPIs for various industries as a good place to start your research.
Top KPIs for Restaurants
- Profit margins
- Cost of goods sold
- Labor costs
- Employee turnover rate
- Sales per employee per hour
Top KPIs for Marketing Agencies
- Revenue run rate
- Gross margin
- Customer concentration
- Employee utilization rate
- Adjusted gross income
Top KPIs for Law Firms
- Billable hours per FTE
- Percentage of partner hours
- Billings per FTE
- Average bill rate
- Average work rate
Top KPIs for Construction Companies
- Incident rate
- Rework costs
- Employee turnover rate
- Average revenue per day
- Customer satisfaction
Top KPIs for Nonprofits
- Donor and donation growth
- Program expenses as percentage of total expenses
- Sources of unrestricted funds
- Liabilities as a percent of total assets
- Full-cost coverage
No matter what metrics matter most to your clients, your job as their trusted advisor is to help them cut through the noise. So spending the time upfront to figure out what they actually care about is the best place to focus your time, energy and communication. As a result, your client will see the value of your services.
about the author
Twyla is Head of the Accountant Channel and leader of the Accounting Partner Program at FreshBooks. She’s a CPA with broad entrepreneurial, accounting, and software experience.
As the former co-founder of an advisory accounting practice, Twyla knows firsthand how to leverage technology and create high-value client experiences. She is committed to empowering accounting professionals and supporting their relationships with business owners.