Any article you read on business goals will discuss the need for identifying and tracking your KPIs, but how do you know if you are tracking the best ones for your company?
So why is that important? If you select the wrong things to measure there is the risk that it can lead to your company’s demise.
So How Do You Pick?
The concept of KPIs is to help you keep an eye on the business and to measure progress easily. But many times we select the easiest things to measure or we choose objectives that we think measure progress – not necessarily the best indicators for our company.
The usual way to identify the right KPIs is to review your business plan and align your goals with specific data points that you need to measure. This enables you to know if various operations are meeting your plan, or if there are areas that are problematic.
A great article in Entrepreneur magazine written by Joe Worth, provides a great way to weed out bad indicators and replace them with more useful information that can steer your business towards success. Worth details the right way to view KPIs by market sector:
Determine What to Measure
To select the most effective KPIs, you really need to understand your business and your operations. Then choose the activities that best lead to efficiency and profitability. These are the items that you need to track and measure.
Once you have identified the right KPIs to track, you need to determine the time line in which they are to be measured. With the right systems you can measure daily, weekly and monthly. You want to be able to see things as they are happening, so you can identify areas that are strong and weak and change your strategies appropriately.
Good KPIs and effective tracking makes it easy for you to hold people accountable for operational improvements. This can help you solve issues before they become a company crisis. That makes for less stress—and that’s good for everyone.
Diane Weklar, the Authority on Accelerating Business Growth, is the CEO of the Weklar Business Institute. She is the author of the award winning book, Mastering the Money Maze: 10 Secrets to Winning Business Financing,which is also an Amazon #1 Best Seller. This book provides practical insight to build a successful business and the practical steps to raise capital to help your firm grow. She can be reached at Diane@Weklar.com.