Measuring Your Businesses’ Success with KPIs
The key to remaining successful and maximizing your company’s bottom line while ensuring its long-term health is to manage by the numbers. While you don’t need to have a finance degree, it is quite easy to feel overwhelmed with a flood of data, much of which really won’t help you effectively manage your business. There is an old adage that it’s best for a business owner to focus on the vital few versus the trivial many. Tracking and measuring a relatively small number of key performance indicators (KPIs) allows you to keep your finger on the pulse of your business and take corrective action where it is most needed. These KPIs could be cash flow, revenue, gross profit, or employee performance as well as others specific to your business or current situation. Others are marketing, client experience and retention, labor costs, production efficiency, and quality control. There may be other factors that are critical to the success of your business, so add those as needed.
KPIs are quantifiable and measurable tools that demonstrate your progress toward achieving your most important objectives.
Identifying Your KPIs — You need to identify the critical performance measurements that reveal your business’ growth or decline and serve as a compass to help you meet your strategic objectives. Start by identifying the outcomes you want to have. Define goals for each area of the business and establish benchmarks that will serve to measure progress in attaining those goals. Be sure to have both short-term and long-term KPIs that provide you a dashboard for measuring operational, tactical, and strategic objectives. Review these monthly and you will find that it will accelerate and improve your decision making, enhance work processes and operating efficiency, and allow you to leverage opportunities you might have otherwise missed. When you are running your business with vital data you can take corrective actions before a problem blows up. In summary, KPIs empower you to make sound business decisions and provide an advantage over your competitors.
Frank Manfre www.frankmanfre.com