If you ask any of my clients how our monthly meetings start, it’s always going to be the same answer: with me saying “Okay, show me the numbers.”
The reason I like to constantly review numbers and other key metrics is because they are what determine success and what drive business owners to go FURTHER, FASTER. (Oh, and because it’s the best way to brag about your success!)
Like everything in life, success is relative. How do you know if you’re business is really improving? Sure, your total turnover may have increased this year, but did your costs go up as well? In other words, are you ACTUALLY better off than you were last year?
Think about this for a minute, how can you take your business to new heights when you don’t know where you’ve been or how far you’ve come? Simple, you can’t! You’ll find yourself lost on the way to the top.
KPIs are the key to success!
The only way to know for sure if you’re improving is to consistently monitor and evaluate your business’s progress using carefully chosen metrics, called Key Performance Indicators, or KPIs.
Now for the hard question: what do you measure? There are a slew of things a company could measure, from financial measures like inventory turnover and gross profit margin to non-financial measures like customer retention and satisfaction. It’s tempting to select them all – a common mistake!
Ever heard the phrase you can’t see the wood for the trees? Well, this is a classic example. If you have too many KPIs, you’ll have an information overload and won’t be able to see the way forward. A strategically chosen set of KPIs will not only help you assess your business performance, it will act like your compass, showing you how and where to take your business.
Ask yourself these questions to select your KPIs effectively:
- Is it relevant?: The KPIs should be important to your business. What indicates success for you? Is it productivity of staff? Is it number of units sold? Is it customer referrals?
- Is it significant?: Will KPI improvements make a significant impact on business performance? Will it take you were you want your business to head?
- Is it measureable?: The KPIs must be able to be measured. Even if a qualitative KPI, can you think of a way to effectively quantify and accurately measure it?
- Is it actionable?: Are you able to take action to improve your KPI? It’s helpful to think about whether this is an actual factor to be addressed or a by-product of some other factors.
- What are your competitors measuring?: While this should be no means dictate what you measure, it can be helpful to see what your competitors are looking at. It can guide and inspire you to select the right measures for your business.
Keep measuring, keep succeeding
Now, for perhaps the most important piece of advice: don’t stop measuring. Having started my own business, I know firsthand the nonstop pressures of the daily grind. You’re so busy working IN your business that you don’t have time to work ON it… You spend so much time putting out small fires that you can’t focus on the big picture… Sound familiar?
Well, you’re not alone. It’s important to make the time and charge someone, whether yourself or an employee, with setting, monitoring and evaluating these KPIs. It’s one of the best, most effective way to grow your business.
It’s not always easy to get the time and perspective needed to do this. If you are in need of help building KPIs into your business, get in touch today for a free consultation. You have nothing to lose and loads to gain!
If you want to see where KPIs can take you, check out video testimonials from clients that have experienced it firsthand.
Let’s go FURTHER, FASTER!
Jeff Miles
The Business Doctor