KPI stands for Key Performance Indicator. Essentially just a way of saying “a measure of how your business is performing”. As a business owner, you can pretty much measure anything related to producing and selling your product or service to understand the performance.
So, why do business KPIs matter?
Well, you may be one of the few business owners that set goals – if you are your are off to a great start however there is no point setting a 12 month or even 5 year goal only to find out when you get to the end of the period you haven’t achieved it. KPIs measure and monitor your progress towards your goals allowing you to make good decisions and take good actions based on them.
It is critical to set good KPIs for your business to grow and succeed. KPIs allow you to understand the objective you are working towards so you can set common goals for yourself and your employees. For your business to be successful you want to see how your business is performing.
Imagine if your car didn’t tell you how much fuel you had left and suddenly broke down. Well, that’s exactly like a business. In order to know what is working and what isn’t you need to make sure you are collecting all the data and seeing how they have performed.
Setting KPIs becomes much easier knowing their purpose and the areas of the business that contribute towards achieving the goals. Generally, there are five areas that will need to be monitored:
In summary, KPIs are the critical bits of information that allow better decisions to be made at every level. Without them, the business will be staying at the same place with no improvement. With them, you have the knowledge to correct your strategies to make sure that they are working in your favour.
If you are curious to know how to implement your KPI, please get in touch.
