What you can measure you can manage
When it comes to judging the performance of a business there’s one thing that matters – the numbers. From turnover to net profit, overheads to break-even point, figures supply us with information to make business decisions.
Whilst accounting information such as this can be invaluable, it’s all too often inaccessible – available only after the year’s accounts have been completed and only really useful when put into context by your accountant.
But in reality, we don’t just make business decisions once a year after the arbitrary date for your accounting year end has passed. Wouldn’t it be more useful to have figures at your fingertips throughout the year? And wouldn’t it be nice to have figures that were more meaningful and indicative of how the business was performing on a day to day, week to week or month to month basis?
This is the reason why we love a good set of KPI’s. Here are a few tips for setting KPI’s for your business…
1. When determining KPI’s for your business, make sure they’re straightforward to collect. Ensure the relevant members of staff are briefed so there’s no chance of your measurements going awry or better still, systematise it so there’s no margin for error.
2. Also, make sure the KPI’s you choose provide you with the information you need specific to your business. Where the number of completed units in a day might be useful in a manufacturing business, the time taken to ‘turn’ a table would be more relevant to a restaurant. If qualitative data such as customer service feedback is important to you, try to find a way to measure this quantitatively.
3. Most importantly, if you’ve taken the time to put KPI’s in place and these have been diligently recorded, make sure you use them! The right set of KPI’s can allow you to identify when things are going wrong at early stage – allowing you to put in correction measures. KPI’s an also help you spot trends and do more of what is performing well.
Choosing the right set of KPI’s isn’t always a straightforward process but it is one that business owners who properly engage with find invaluable.
For help from our business consultants on choosing and setting up the measurement of KPI’s, please get in touch.