All about KPIs: What are they, and why are they important?
As a small-business owner, it's crucial to monitor how your business performs, especially in its beginning stages. Just looking at the amount of money you make every day isn't enough to determine if you are on track to reach your long-term business goals.
That's why small-business owners need to choose, and track, key performance indicators (KPIs). They're exactly what they sound like: A selection of your company's activities that you will monitor to determine how well it's doing overall.
Think of it this way: KPIs are to businesses as health indicators are to a body. If you were trying to improve your overall health, you'd have specific goals in mind. And there would be ways for you to monitor whether or not you're achieving those goals.
For example, if you needed to bulk up or slim down, you'd weigh yourself every so often and keep track of how many kilos you gain or lose. If you wanted to lower your heart rate, you'd measure beats per minute during exercise and rest periods. You might even just have a goal to eat more fruits and vegetables daily, and you would simply measure your produce intake whenever you eat.
KPIs for an organisation work similarly. You're trying to improve the overall wellbeing of your company, so you work towards tangible goals.
KPIs look different for every business because no two companies are exactly the same. The tricky part is choosing your KPIs wisely.
How to choose KPIs
The first step to choosing your KPIs is determining long term business goals.
Do you want more name recognition, or more social media interactions? Do you want to become the go-to brand for the average consumer in your industry? Or do you want to increase your profits by 15% by the end of the year?
Some of these goals are measurable with quantifiable data, and some require more qualitative analysis. In the end, you'll probably have a few different types of KPIs, because you likely have many goals. To choose the right KPIs, you should discuss your goals with your team or, better yet, a business adviser at Wilson Porter.
How to monitor KPIs
Monitoring quantitative KPIs requires organisation and planning. In relation to money goals, seeking help from an accountant can provide invaluable insights. An expert can help you monitor your month- over-month profits and spending, giving you important information on what adjustments you should make to meet your financial objectives.
Qualitative KPIs might require a customer success or marketing team, or a client advisory board. If your goal is for consumers to view your brand in a more positive light, or to increase the frequency with which your customers recommend you to their friends, the most important source of information is your client base itself. You could set up focus groups or send our surveys to garner information on general sentiment toward your organisation.
Choosing and monitoring your KPIs can be a daunting task. At Wilson Porter, we offer business development support to help small businesses make the right decisions.
Contact us today for more information.