KPIs give you visibility into how your business is performing, but it can be challenging to take these metrics and align them with your business goals
You may be aware that key performance indicators (KPIs) are must-have metrics for your business. They provide you with data about how your business is doing in various areas, from cash flow to lead generation to revenue.
But when you’re just starting out, you may have no idea what to track, who should track it, and how to track it. In a previous blog post, we covered how to track financial numbers to improve your business. Now, we’re going to talk about how to start from scratch.
Here are the steps to take when you’re just beginning to track business KPIs.
Setting goals to align with your KPIs
Your first step should always be coming up with goals. Otherwise, your KPIs won’t provide as much insight into performance as you’d like them to.
Each goal must be SMART: Specific, Measurable, Actionable, Realistic, and Timely. You need to know exactly what you want, the steps to take to get there, and how you’re going to measure it. You should know why this goal matters for the business and where each team or department fits in.
Goals could be retaining more customers, generating more leads, seeing more revenue, or increasing employee retention. Whatever you need to track, make sure you know its significance and what success will look like. What number do you need to hit to be successful?
Your goals may also be informed by industry benchmarks, so make sure you do your research to figure out current standards and best practices in your industry.
Remember that each department or business function will have its own set of KPIs. Depending on your business’s size, it may be wise to have each team create their own goals and KPIs that are only applicable to them. You can then identify opportunities for improvement on a more granular level.
Choosing the right KPIs
An important point before you choose your KPIs is that you should be selective. Narrow your focus so that metrics are actually in alignment with the aforementioned goals, and you’re not tracking everything at first. Ask yourself, what do we really need to track goal progress? What kinds of KPIs are not that important right now?
Per goal, aim for just about five to ten KPIs, maximum. Otherwise, you’ll be gathering too much data that won’t really be as applicable to what you’re trying to accomplish.
The KPIs you decide to track initially should directly align with a specific goal. For example, if you’re trying to retain more customers, customer churn and retention rates are going to be your primary KPIs to track and analyze.
Finding your method
So now that you know your goals and the type of KPIs you’re after, how do you actually start tracking them? First, you need to identify who will be doing the tracking. Will it be an entire team, one person, or a shared responsibility? Next, decide how you’re going to do it. And that means figuring out the tools, applications, and platforms that will do the tracking for you.
For example, using a platform like Google Analytics will give you KPIs related to your marketing campaigns, like click and conversion rates. Financial figures will come from accounting software or processes. There just needs to be someone in charge of pulling this data together so you can understand how your business is performing and how close you are to meeting your targets.
Use a tool that makes sense for the business function and department. Make sure that if you’re analyzing a lot of data that you integrate a KPI dashboard that will show you the information in digestible formats, like summaries, snapshots, graphs, and tables. Sometimes, all you need is a spreadsheet, like a Microsoft Excel or Google Sheets document.
Since you’re just starting out with KPIs, it’s acceptable and understandable to try out different methods for a time and see what works and what doesn’t. Involve other business leaders and managers in these decisions so you can take on new perspectives and hear about their needs and thoughts.
Getting on top of your financial KPIs
KPIs regarding your finances are some of the most important to focus on when you’re creating your strategy. These numbers tell you facts like the ROI for certain products and campaigns, how much it costs you to lose a customer, profits generated each period, and much more.
When you need assistance coming up with a plan for your financial KPIs, work with the team at Franco Blueprint. We help business owners and executives set up the right processes for automating your accounting process. We can also discuss your tax management, compliance, and budget strategies.
Contact the professionals at Franco Blueprint to get started with a free consultation and get your business on the right track for success.