Keeping An Eye On Your KPI’s
August 16, 2011
by Justine Parsons
Who here thinks Key Performance Indicators are things only big corporates need to worry about? Or perhaps a better question – who’s only KPI is their bank balance at month end?
By definition we can say “We know we are doing well when XYZ is happening” is a KPI.
For example, if we are an automotive repair garage, we might say We know we are doing well when we are charging out 85% of our total payable labour hours. Or, if we are a hairdressing salon it might be when 60% of our clients immediately re-book their next appointment. Whatever they might be, if we’re not clear on them and we’re not measuring them, WE ARE simply waiting to check our bank balance!
As a Business Coach, getting mastery or clarity on the KPIs of a business is one of the first areas I go to with the owner. Most business owners have a fair idea what they are, but much less are measuring them and fewer still are applying the right strategies to improve them. It’s OK saying the GP% benchmark for my industry is 55%, however when I don’t know where my margins are right now, it’s hard to get myself (or my team) excited about going after it. “I think we’re doing really well boss” – compared to what??
There’s many schools of thought of how many KPIs we need in our business – right from “only 1” to “as many as you can think of”. Typically with businesses I work with we focus on 2-5 initially. Once these are agreed upon, we set down our “stake in the ground” as to where we are now, set our goals as to where we want to get to, then draw the “strategy map” as to how we’re going to get there. Typically making this a 90 Day period I’ve found has worked the best.
So time to dig out that Business Plan you wrote a while back and check how you’re going on those KPIs. Remember – every business needs them no matter what your size or shape. If you need any help on clarity – give me a call.
Guest Blogger: Clif Shaw of Recalibrate
“Face-To-Face Business Development Programs For Small To Medium Sized Businesses”