There are two ways to grow your business and they are:
- Fly by the seat of your pants and use your gut feeling to determine what is working well, how many Clients you need and what will work in the future.
- Use real data and Key Performance Indicators (KPI’s) to determine what is working well, how many Clients you need and what will work in the future.
Which one do you think will work best?
As a business owner, understanding your Key Drivers or Key Performance Indicators is absolutely critical for your continued success. Key Performance Indicators are the secret sauce for success. They are a metric, a statistic, a numerical representation of something that is happening in your business. Key Performance Indicators may be financial such as a gross profit margin or a sales target and they can also be non-financial such as customer satisfaction ratings or website views.
Take Kate for example, Kate owns a florist and she knows that in order the open door to her little store that she needs to make a minimum in $500 in sales every day to cover her lease, wages and business outgoings. Kate also knows that if she has at least 60 people visit her website every week, that 10% of these visitors will convert into regular Clients.
Examples of Key Performance Indicators businesses can measure include:
|· Gross profit margin
· Sales Targets
· Return on Equity
· Stock Turnover
· Accounts Receivable Age
· Sales Growth
· Product Performance
· Quote to close ratio
· Average Sale Value
|· Brand Awareness
· Customer Satisfaction rating
· Keyword ranking
· Social Traffic and Conversions
· Social Media followers
· Social Engagement
· Email marketing open rates
· Newsletter subscribers
· Website Traffic
As you can see there are a variety of Key Performance Indictors that a business could measure. We strongly recommend that you don’t focus on all of these at once. Instead we recommend that you identify 3-5 critical Key Performance Indicators that will have the most powerful impact on your business and simply focus on these.
Once you know what these 3-5 critical Key Performance Indicators are you are then able to implement strategies and tactics that will improve the outcome for each Key Driver and this will result in increased profit, cashflow and ultimately, business value.
Many of our Clients feel that our Key Performance Indicator Process gives them a deeper level of understanding of how their business operates. It allows them to clarify performance expectations with their Teams and this results in increased efficiency, productivity and employee job satisfaction.
So do yourself and your business a favour and add the KPI Secret Sauce into your organisation. You will be amazed at how simple changes can impact your results.
For guidance on identifying, improving and measuring your Key Performance Indictors contact an Achieve Business Dynamics Business Coach today!