Developing and monitoring key performance metrics will help you ensure that your business performance is optimal.
When you track the right metrics, you will have the information you need to guide decision-making and adjust operations to achieve your desired outcomes and goals.
What are Key Performance Indicators (KPIs)?
A KPI is a measureable metric that demonstrates how well your business is performing against your key objectives, goals, and priorities.
Measuring KPIs is critical for the management of your business and understanding and improving your overall health.
Why You Need KPIs
Developing and understanding your KPIs will help you to:
- Monitor company health
- Measure progress
- Make adjustments and stay on track towards goals
- Solve problems and tackle opportunities
- Analyze patterns over time
How to Develop Key Performance Indicators
To create KPIs that drive your business and team in the best direction, make sure they are SMART:
- Specific: be clear about what each KPI will measure and why its important
- Measureable: the KPI must be measureable to a defined standard
- Achievable: you must be able to deliver on the KPI
- Relevant: your KPI must measure something that will directly relate to business improvement
- Time-bound: assign a time-frame to your KPI and create milestones to monitor progress
What KPIs Should You Measure?
KPIs should be customized to your unique business and goals, however these are some that make sense for almost all owners:
- Gross profit
- Revenue – cost of sales
- Percentage – cost of sales / sales x 100
- Payroll as a percentage of revenue
- Salaries / revenues x 100
- Cash flow
- Net cash flow, cash flow margin, cash on hand
- Number of customers per day (retail or hospitality)
- Number of jobs per day. (Service based)
Help Developing KPIs
KWB Accountants & Advisors is pleased to offer you the essential business accounting services you need and the advisory support that will help you thrive. Benefit from a suite of customizable business advisory services – like KPI Development & Tracking – and a team that will help you reach your potential and create the business and lifestyle of your dreams.
Book a free consultation to discuss your accounting and advisory needs and goals and to learn how KWB’s ONSight Advisory services can support you.
Learn more about ONSight Advisory services here.