Always Reacting, Never Planning? Use KPIs to Drive Growth

Introduction - Use KPIs to Drive Growth

Many construction and engineering SMEs feel like they’re constantly chasing problems rather than preventing them. Cashflow is tight, projects slip, suppliers demand payments, and directors spend their time reacting to fires instead of planning for growth. This reactive approach isn’t caused by lack of effort, it’s caused by lack of visibility. Without clear operational KPIs (Key Performance Indicators), directors are effectively driving blind.

KPIs are not just numbers on a dashboard. They are the levers that keep projects profitable, cashflow predictable, and growth sustainable. When done right, they show what’s working, what isn’t, and where action is needed. When ignored, directors are left relying on gut feel, late reports, and hope.

This matters because many SMEs miss opportunities for higher margins and smoother operations simply because they don’t track the right metrics.

At Jones Financial Accounts (JFA), we help businesses turn reactive firefighting into proactive planning through KPI-driven management. This blog will explain what to review, why it matters, the strategy to get it right, and how avoiding common mistakes can transform your business.

What You Need to Review

The first step is reviewing what you currently measure. Many SMEs only look at their bank balance or turnover, which paints an incomplete picture. To move beyond reacting, you need KPIs that cover three areas:

• Cashflow KPIs. Track debtor days (how long clients take to pay), creditor days (how long you take to pay suppliers), and project cashflow forecasts. These highlight pressure points before they become crises.

  
  

• Project KPIs. Monitor job costing accuracy, cost-to-complete, and gross margin per project. If margins are slipping, you’ll see it early.

  
  

• Operational KPIs. Look at utilisation rates (are staff and subcontractors fully productive?) and cycle times (how long it takes to move from quote to invoice).

  
  

By reviewing these, directors move from simply reacting to problems to spotting trends early. For example, if debtor days creep up from 45 to 60, you’ll know to tighten credit control before cashflow breaks. Reviewing the right KPIs creates clarity, allowing directors to plan with confidence.

Why It Matters for Businesses

Done wrong, businesses operate in the dark.

• Without KPIs: Projects run over budget, but directors only find out months later when the accountant closes the books. Cashflow dries up suddenly because nobody tracked when retentions were due. Staff appear busy but margins stay flat because productivity wasn’t measured. This leads to lost profit, missed opportunities, and strained supplier relationships.

  
  

• With KPIs: Directors can see problems forming before they escalate. A weekly cashflow forecast shows whether payroll is at risk. A project KPI reveals when labour costs are eating margin. A utilisation report highlights when staff capacity is underused, allowing you to redeploy resources.

  
  

Example:

A £2m-turnover engineering firm improved its gross margin by 5% simply by tracking cost-to-complete and flagging overruns early. That extra £100k profit didn’t come from new projects, it came from visibility and control.

In construction and engineering, where projects are complex and payments delayed, ignoring KPIs is like building without blueprints. The risk is silent, but the cost is real.

Strategy to Get It Right

Here’s a simple framework to introduce operational KPIs effectively:

1. Choose the right KPIs. Less is more. Pick 6–8 metrics that cover cashflow, project performance, and operations.

   
   

2. Use real-time data. Relying on last year’s accounts is too late. Use cloud accounting tools and project management systems to update weekly or monthly.

   
   

3. Create visual dashboards. Directors and site managers need information they can understand at a glance, not 20-page spreadsheets.

   
   

4. Assign ownership. Make someone responsible for each KPI, finance tracks debtor days, project managers monitor job margins, operations oversee utilisation.

   
   

5. Review regularly. Hold monthly performance meetings where KPIs are discussed and action plans agreed.

   
   

The key is consistency. Introducing KPIs isn’t about creating more reports, it’s about embedding a system where numbers drive decisions. Over time, this shifts the business from reacting to problems to planning with foresight.

Common Mistakes

• Tracking too many KPIs. Overload creates confusion and dilutes focus. Stick to the essentials.

  
  

• Focusing only on financials. Numbers like turnover don’t tell you about project overruns or staff utilisation. Operational KPIs are just as critical.

  
  

• Ignoring the story. A KPI is a signal, not the answer. Directors must dig deeper to understand why performance is slipping.

  
  

• Failing to act. Collecting KPIs without making changes is wasted effort. The consequence is wasted time, declining profitability, and frustration among shareholders and staff.

Misconceptions

• “KPIs are only for big companies.” Wrong, SMEs benefit most because they often lack spare cash or room for error.

  
  

• “KPIs take too much time.” With the right systems, KPIs can be automated and updated in minutes.

  
  

• “We already know the numbers.” Directors may “feel” busy, but without hard data, hidden inefficiencies go unnoticed.

Why Professional Support Pays Off

At JFA, we know which KPIs truly matter in construction and engineering. We set up systems that track the right data, produce management packs tailored for directors, and translate numbers into plain-English insights. This means:

• Stronger margins through better project control.

• Improved cashflow by reducing debtor days and forecasting gaps.

• Reduced risk with early warnings on underperforming projects.

• Time saved for directors who can focus on strategy, not chasing numbers.

  
  

Professional support turns KPI tracking from a burden into a growth tool, one that keeps your business moving forward.

Key Takeaways

• KPIs turn reactive firefighting into proactive planning.

• Focus on cashflow, project, and operational metrics, not just turnover.

• Consistency and ownership are key, KPIs only work if acted upon.

• JFA helps SMEs implement KPI systems that improve profit and reduce risk.

Wrapping up today's insights, tomorrow we simplify another accounting challenge.