In a high-inflation environment, revenue growth can be deceptive. We have seen companies grow top-line revenue by 20% while their Net Income dropped by 15% because they lost control of their operational efficiency.
To operate with precision, you must ignore the “Vanity Metrics” and obsess over the “Sanity Metrics.”
1. Labor Efficiency Ratio (LER)
For every $1.00 you spend on payroll, how much Gross Margin comes back?
The Benchmark: In service trades, you need a Direct LER of 3.0 or higher. If you are at 2.2, you are overstaffed or underpriced.
2. Cash Conversion Cycle
How many days does it take for a dollar to leave your bank account (labor/materials) and return as profit?
If your cycle is 60 days but your payroll is weekly, you will face a cash crunch even if you are profitable on paper.
3. True Gross Margin
Stop looking at “Markup.” Margin is what you keep.
The Leak: Most owners forget to load “burden” (taxes, insurance, vehicle wear) into their COGS. This means you think you are making 40% when you are actually making 28%.
The PAGE Solution
Data without context is just noise. We build Flash Reports—a one-page dashboard delivered every Friday that tells you exactly where you won or lost that week. Stop waiting for your CPA’s monthly report to run your business.
