Metrics Matter - relying on instincts and guesswork won't help sustainably scale your business. Even basic questions like assessing profitability or deciding when to hire a new specialist can be difficult to answer.

We rely on two forms of metrics to get us the decisions we need - Financial and Non-Financial Metrics. This article will not fully unbox and give examples for each metric and it’s importance, benchmarks and levers, rather, will compare and contrast the use of Financial vs Non-Financial Metrics.

Financial Metrics, mainly core financial numbers that you can get from your bookkeepers/accountants, are where we can start. The four main financial metrics you can rely on are:

• Agency Gross Income (AGI)
• Delivery Margin
• Overhead Spending
• Operating Profit

Financial Metrics are precise but lack important characteristics for day-to-day business operations. They can be slow and retroactive, taking up to 2 months to get reconciled. Additional depth, precision, or speed can be expensive, making it challenging to use financial based metrics for decision-making. Using simple and inexpensive Non-Financial Metrics in combination with Financial Metrics can result in more frequent performance touchpoints and forecasting ability.

Non-Financial Metrics are mainly operational-based numbers that are inexpensive and much more actionable. The main four we follow are:

• Average Billable Rate (ABR)
• Utilization
• Scoping Accuracy
• Forecasting (Capacity, Utilization, ABR)

It is important to note that tracking your performance KPIs does not have to be complex. By making simple adjustments to your financial setup and tracking financial (and more importantly, Non-Financial Metrics), you can gain greater insights and more frequent visibility into your business operations.

While it may be tempting to strive for highly precise and detailed metrics, keeping things simple can offer significant clarity with minimal effort and overhead. Even a small degree of visibility can greatly inform your decision-making process, promoting the overall profitability and health of your business.

Why the Disconnection?

You might be thinking - what’s the reason for the distiction between the two terms?

Non-Financials rely on three primary data sources: