Starting up a business is a challenge in itself, but once you are up and running how do you measure success? How do you identify high performing areas and areas that require improving?
My background is predominantly sales based in the software arena, so Key Performance Indicators (KPIs) are prominent in my line of work.
They are great tools for monitoring success in any kind of business, and for you to identify areas which you need to focus on to improve overall performance.
They will differ from business to business, but the principle of KPIs are always the same.
Measuring KPIs will help you to understand your business inside out and will really benefit you when making strategic decisions. Furthermore KPIs will alert you to both success and/or potential problems.
Some common KPIs to track would be:
l Customer Satisfaction, there are models you can use such as the Net Promoter Scheme to measure this
l Say–do Ratio, the number of things done that you said you would do.
l Conversion Rates, simply put this is how many quotes have turned into sales, how many calls into meetings etc.
l Revenue Run Rate, how much revenue do you need to bring in daily to reach your monthly target
l Employee Satisfaction, how happy are your team?
Generally your accountant will be able to assist with developing KPIs that are relevant for your business, they may even suggest software which could track some of those KPIs for you.
When deciding what to monitor you will need to take into consideration a number of factors such as the industry you’re in, the stage of your business, your goals, your current size and location and any personal circumstances that could impact the performance of your business.
Ultimately a KPI is a metric to measure the progression of your business.
The idea is to focus on measuring areas that are key to the success of your business. This may only amount to half a dozen items but it should be enough to give you a clear overview of your business performance.
By gaining a really good understanding of your KPIs and what they are telling you, you can start to improve your business or resolve any issues they may highlight, again in some instances you may want to speak to your accountant to help you interpret your KPIs
No matter what the business, KPIs are vital. They are the pulse of your business.