Discover the Benefits

of KPI's for YOur Business

 

 

How well is your business performing?  Key Performance Indicators help you answer that question.  A KPI is  a quantifiable measure of performance over time for a specific objective. KPIs provide targets to shoot for, milestones to gauge progress, and insights to help you make better decisions.

A few things to keep in mind as you establish your KPI’s

  • Directly tied to your objective. There are many things you can measure in your business, but KPIs are a unique subset which can be directly tied to an end result. What types of things should you consider to be KPI’s? For each business it’s different depending on what you are trying to accomplish including but not limited to: increased sales, reduced turnover, improved efficiency, and reduced errors.
  • Easily and exactly measurable. If it’s hard to collect the data, you probably won’t do it on a regular basis. If the metric is vague, it’s too easy to fool yourself into thinking you are close to your goal when you aren’t.
  • Action oriented. Each metric should have a specific set of actions you will take to improve performance. It’s hard to reach a goal if you don’t know how to get there.
  • Don’t have too many metrics. It is easy to get overloaded and track too many key performance indicators at once. Ideally the right number of metrics is 5 – 7.
  • Swap our KPI’s. As your business changes, your KPI’s may need to as well.

More than Sales Results

Most successful small business owners, look to their financial statements for their KPIs. Tracking gross sales, expenses, receivables, and accounts payable provide a great snapshot of where the business is in relationship to past performance. While these numbers are helpful to predict short term sales trends and next month’s cash flow, they only tell you part of the story.

Relying exclusively on your financials to drive your business is like driving  your car by looking in the rear view mirror. You can see exactly where you have been and how you got there, but you won’t have a clue about the road ahead. To predict the future, you need to pay attention to numbers which preceed the sale.  To find the right numbers think about the steps prospective customers go through before they buy. Look for ways of measuring the pre-buying behavior.

For example, prospective customers might visit your website, attend a webinar, engage with you on social media, sign up for your newsletter, or request a proposal. Study the trends over time and establish target goals. Then build marketing programs designed to help you achieve your goals. If you pick the right metric, it is easier to anticipate when sales will slow down, and adjust marketing efforts accordingly.