Site Loader

Key performance indicators….a pretty powerful sounding term, right?  That is because it is powerful. 

Think about it:  

  • Indicators, a term that allows you to determine how something is doing or performing.
  • Performance Indicators:  a way of measuring performance against indicators that are important to your success
  • Key Performance Indicators:  The most critical or key performance indicators that you can measure to determine what factors drive your business’ sales, performance, marketing, closure rate, business health, etc.

Given that definition and concept, wouldn’t every business what to know what their key performance indicators are and then monitor them, drive them, fuel them?

Successful businesses do not leave their success up to chance, they drive it, create it and them monitor their success.

If you knew what created business success for your company and could plan for it, set goals to be achieved, think about how much easier it would be to drive success and/or determine why you are not achieving that success and use your KPIs (key performance indicators) to fuel the changes that need to be made to create improved success.

Key performance indicators that can be useful and telling that you should consider where appropriate for your business:

  • A sales team might tract sales by sales rep. Number of customer contacts, closure rate, average sales per customer.  Any sales rep not meeting the goal needs to explain the difficulties with the goal so that changes can be made to their process, they training or the goal.
  • Your company might determine average sales per month to reach your revenue goal and then track every month.  Months that fall short need to be analyzed for indications of why the sales goal could not be reached.
  • Gross profit margin in total or by category so you know what drives the most gross profit and build a strategy to sell more of that category than low profit margin categories
  • How many customer touches do you need to drive a sale?  If you know that you close 30% of your cold calls and you need 30 new customers a month, then you need 100 cold calls a month to drive your new customers a month KPI.
  • A sole practitioner such as consultants, attorneys, accountants might need to bill 30 hours a week to drive their revenue goal. Develop a KPI that tracks your billable time AND remember that you need 30 hours a week so you look for that billable time.

There are unlimited numbers of KPIs that you can use or design that will give you the information you need to:

  1. Determine what factors drive success for you
  2. What is the bench mark for these factors that will ensure success?
  3. Which of these factors are not meeting expectations?
  4. Determine how to impact the factors that are not performing

How powerful would you feel if you knew exactly what drove success for your business?  Then, knew what the benchmark was for those indicators and could measure your success at meeting those benchmarks or goals.  And then could implement changes that propelled your success.  Why wouldn’t everyone do this?

Because they need a strong team and people who know how to develop, measure and drive these Key Performance Indicators.  Get that person on your team or hire the right CPA firm that can act as your CFO, business consultant and advisor to keep you on track, can accelerate growth and improved profitability. 

DO THIS!  It will make a huge difference in your ability to achieve success, however you define it.

Post Author: Tricia O'Connor CPA MBA