One of the biggest misconceptions amongst small business owners is that KPI’s are something that big businesses set and track. They and their business are not sophisticated enough for KPIs or they don’t need a KPI to tell them how their business is performing or they’re snowed under with work and don’t have time for more admin – these are just a few of the common responses we receive when we question how they track performance and growth.
So what exactly is a KPI and how will it help you manage your business? A KPI is a Key Performance Indicator. Coming in different shapes and size, they can be implemented to measure just about anything worth measuring in your business. They can have either a financial or operational focus and will not only help you grow and remedy pain points, but assist with strategic planning.
Different KPIs will tell you if your business is growing as quickly as you think, or if you’re really making as much money as you believe. If your pricing is right or if you can afford to invest in new equipment. How long it takes you to convert a sale into cash or how long stock sits on a shelf.