Helping you and your business grow profitably and sustainably

Key Performance Indicators

 

In simple terms these are the areas of your business that are crucial to your success.

 

It is vital to indentify and then measure these key areas or indicators to give you a solid indication of how your business is doing.

 

KPI’s may be daily, weekly, monthly and yearly measurements and in fact would normally be a combination of all four. You need to carefully think about what the key indicators of your business are and then set up systems and procedures to ensure they are accurately measured and recorded. Of course it is then important that you get these measurements timeously so you can react or should I rather say be proactive and take corrective action before serious problems arise.

 

With these KPI’s you can monitor your business progress on a daily, weekly, monthly and yearly basis. For example, you can monitor order intake and sales daily, cash flow weekly and monthly, profitability weekly or monthly. If new customers are a key, then this should be closely monitored. It is difficult to give a definitive list of the key indicators although some, such as sales, cash flow and profits would probably apply to all.

 

To indentify your KPI’s ask these questions:-

 

  1. What drives my sales? e.g. new enquires via the website, new accounts opened, repeat sales, number of sales calls made etc.
  2. How do I measure this?
  3. What drives my profits? e.g. gross sales, gross profit % (volume or value?)
  4. What drives my costs?
  5. How do I measure this?
  6. How do I monitor my cash flow?

 

Be careful not to try to monitor too many at a time as this could only serve to confuse you and in fact distract you from the real key ones. Therefore, take some time to think about these and be sure you are measuring the most important areas. You want to be able to see these at a glance, no matter where you are, and be able to get a good feel of how the business is doing.

 

Once you have identified your KPI’s insist that you get these timeously and they are accurate

By | 2018-02-20T07:11:31+00:00 August 8th, 2016|Articles, Financial|0 Comments

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