Or key performance indicators and how they can help your small business grow.
What is a key performance indicator?
Key performance indicators (KPIs) can also be known as metrics or scorecard and are a means to monitor performance. They allow a business to identify if they are meeting their goals, targets and objectives. KPIs will vary from business to business as what is important to one business isn’t always important to another.
Aren’t KPIs just for big businesses?
No, KPIs can be used for any size business. Every business should have a plan and KPIs help you to monitor your progress against this plan.
Are KPIs just numbers?
KPIs don’t need to be numbers but to be useful the key performance indicator does need to be measurable. You can present the information any way you like though. A common way is through graphs but you can use words or graphics, anything that it is clear and easy to understand. It should also be shared with any team members so you all remain focused on the key goals.
How to identify which KPIs for my business?
The first place to look is your business plan (If you just thought “What business plan?!” see here). The business plan determines the overall direction of the business and from here the key steps that are needed to grow can be identified. These steps can be monitored and become your key performance indicators. Also consider your stakeholders and what matters to them.
How many should I use?
The number required will depend on your business and goals. It is better to aim for a smaller number of relevant KPIs and stick to the headline numbers than suffer from information overload. Between 4 and 10 is usually a good number for most businesses.
How often should I measure these KPIs?
This will also depend on your business and goals. Though don’t just measure them once as this will not provide useful data. It needs to be an ongoing process and to be effective KPIs should be reported and assessed on a regular basis. This could be once a month or in a fast changing environment this could be weekly or even daily.
A common KPI is average sales per customer – if this increases throughout the year, it could be assumed something is going right in your business.
Customer satisfaction – using a survey to monitor and ideal this should be going up too.
Number of leads converted to customers
Time from initial contact to seeing a client – ideal for tradespeople, this one should be going down.
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