Key Performance IndicatorsYour business performance is likely to be dependent on a number of factors. It is important that you identify which of these factors play the biggest role in how your business is doing. These Key Performance Indicators (KPIs) will vary from business to business and industry to industry:
- Retailers and service providers will most likely focus on sales and “cost per acquisition” (i.e. how much does it cost in terms of marketing to get a new client?)
- Manufacturers will look more at production efficiency and the reduction of wastage
The end result of your KPIs should be a selection of information that relates directly to the success of your business. It should clearly show you when things are going well or if things need to improve and exactly what needs improving. It will eliminate the hidden, nasty surprises that can keep a company down. Take a look here for some good KPI examples that will help you identify your own.
Effective Performance TrackingTracking and planning changes to these figures are what will guide your company in its pursuit of success. Therefore, it is essential to have a clear record of this performance both for you and your staff. This helps everyone see clearly just where problems and their solutions may lie. You want to make sure that your KPIs are displayed something like this:
- Name and define the KPI.
- Explain why the KPI is important and how it may affect business
- Note what parts of your business affect this KPI
- Define how you plan to measure and record this KPI
- List the staff member responsible for documenting the KPI
Act QuicklyOnce you have your KPIs, you need to make sure someone is watching them. Having different staff members taking charge of different KPIs is a good way of ensuring you stay on top of performance issues. It keeps a stronger focus on the relevant information and each KPI can be recorded more quickly than if a single person were to take on all of them at once.
This also gives you the means to work on problems as soon as they come up. The person responsible for tracking the KPI should also be made responsible for planning improvements and carrying them out. Keeping KPIs separate is important for sole traders, as well. It keeps all the details clear so you can more easily confront them and it also makes passing on the responsibility easier to manage.
KPIs are not a solution to your business’ problems. But, they are a huge help in ensuring problems don’t affect your business for long. By tracking your performance and keeping a clear record of figures, you know straight away if something is wrong. Solving issues is still up to you, but KPIs are a great way of ensuring these issues can’t hide.