Why Are KPIs Important to the Performance of My Business?
If your business isn’t paying close attention to your key performance indicators (KPI) - or even worse, isn’t tracking any, it’s time to make a change. Many business owners either don’t place value on KPIs or don’t track them at all, leaving them without a strong idea of how different areas of the business are performing. KPIs are much more than just a number. A good KPI is one that allows you to not only measure the success of your business but also draw conclusions as to where problems lie and what adjustments need to be made in order to reach your goals.
Create Effective KPIs
It’s easy enough to measure a random aspect of your business and call it a day. An effective KPI, on the other hand, should measure the critical aspects of your business and allow you to quickly garner an idea of its overall performance. Effective KPI measurements can include the average monthly recurring revenue (MRR) per account, client retention, sales numbers, conversion rates, and everything else that is crucial to keeping the business running. One of the main functions of KPIs is to bring issues to the forefront by alerting you when there’s a significant issue, such as a drop in MRR.
Keep a Timeline
Without a history of past KPI numbers to compare against, a KPI really is just a number. You’ll need a frame of reference to compare against and see growth or decline in different indicators. There’s no such thing as too much data; keeping an extensive history of past KPIs not only allows you to see the growth in your business, but also see the results of past decisions, and evaluate their efficacy. You may find, for example, that sales drop significantly in Q2 every year. After identifying the pattern, you’ll be able to proactively prepare for these issues before they cause trouble for the business. Timelines can also be used to project future growth, and whether or not your business will be able to achieve its future goals. At the end of the quarter, year, or when you’ve reached the deadline for your goals, you’ll be able to look back and see which parts of the business succeeded in their role, and which areas need improvement.
Business & Beyond, LLC is dedicated to helping your business grow, with coaching and consulting programs tailored to your specific needs. Whether you’re in need of help with establishing quality KPIs, or just getting your business up and running, we’re here to help. Contact us today to learn more about our services.