Setting key performance indicators (KPIs) is important for every business. Not only do they ensure that you can see the trends in your business’s performance and growth but they can also prove beneficial for spotting potential problems or missed opportunities and allow you to make make positive changes to your business.
Most importantly, setting KPI targets will help you to better define your goals and strategies, cutting through the noise and allowing you to see whether changes are having a positive effect or not.
Every business is different and, as such, will have different goals, objectives, and KPIs they need to put in place. That said, there are a few best practices to bear in mind when deciding how best to measure performance.
How to set KPI targets
Review, assess, and plan
Firstly, you need to assess where you are and where you want to be. Making annual goals and creating a 5-year plan will help you understand what you need to measure. Your business may have different departments, teams, and projects, so it’s important to analyse each area of the business as you set the KPIs for the growth of your business. For example, measuring your retail business through KPIs may be entirely different to measuring another business through KPIs.
Choose the most important KPI for your business growth
For many businesses, the most important KPIs for their growth are financial, though there are exceptions to this rule (i.e. in non-profit organisations). Setting financial targets will provide a direct growth indicator that can be easily measured and assessed at any time, but lead volumes or customer retention can also be important metrics for certain businesses. To read about what KPIs you should be setting read our article on setting smart goals in your business.
Set your KPI based on the current potential of your business
If you’re a small business, it’s likely that your sales targets and market share are shifting all the time. Cutting through the noise and setting your KPIs based on the current potential of your business will be critical if you want to succeed. Projections based on data that no longer accurately reflects the potential of your business will only slow you down, so take your time and make sure your KPIs are based on relevant information.
Connect your KPIs
When designing your KPIs, remember that they should all support the final goal of growing your business. For example, customer satisfaction and improved processes are both areas that can have a positive financial impact.
Ensure your KPIs are measurable and the goals are achievable
Before you finally share your KPIs, make sure that they can be easily measured and reported on. Whether that is checking your books, analysing social media engagement, or reviewing customer feedback, a goal is useless if it can’t be measured. KPIs are there for you to learn from, so making sure they are realistic and reveal important information about performance which is essential.
Setting KPIs and using them to measure and improve your business processes is essential for sustained business growth. Make sure that everyone in your business is on the same page and working together towards the same goal. You may find that, over time, you need to re-assess and adjust your KPIs or strategy if your team is being stretched too thin or not challenged enough. Make sure you don’t leave it until the last minute though: It’s always best to keep on top of your KPIs and check in regularly on their progress.
If you’re looking to set your KPIs and reach your goals but you need extra capital to do so, we’re here to help. Our loans are designed to help small business owners achieve their goals and grow. At Boost Capital, we are champions of small business and we can have the funds with you in just two days, so you can worry less about cash flow and focus on designing and implementing the KPIs that will take your business to the next level. Get in touch for an instant, no obligation quote or read our blog for more insights into the industry!