As a small business owner, one of the most important things you need to determine is your Key Performance Indicators (KPIs). This is vital for measuring the performance of your business, and ensuring you make the right moves in order to grow. With that being said, we have put together help for small businesses that are choosing their KPIs.
- Focus on fewer variables – A lot of business owners make the mistake of choosing as many KPIs as possible. However, measuring against a huge number of metrics is not the answer to how to make a successful business. It is better to choose between three and five variables that matter and that you can impact.
- Identify your audience – It is imperative to identify your audience, as your KPIs are going to differ based on your audience. It is a good idea to have KPIs for financials, customers, and any other stakeholders.
- Make sure your metrics are tied to actions – If your KPI does not point you in the direction of where action needs to be taken, it is not a good indicator.
- Avoid vanity metrics – Vanity metrics are those that look impressive but they don’t really have any substance. You need KPIs that are going to reveal how to grow a business, not simply those that look good on paper. For example, the number of page views you receive may be a KPI you are considering, but is this something that is progressing your business to the next level? What if you receive a large number of page views, but very few make an order?
- Choose the right tools – Selecting the right software is crucial. You need something that shows you what KPIs are performing bad and which ones are performing well, as opposed to a static set of KPIs.
So there you have it – our help for small businesses choosing their KPIs. Follow the five tips above to get started.