How to set KPI in your business easily?
If you are an employee, you are probably very familiar with the concept of KPIs or Key Performance Indicators as a tool used by your manager or supervisor to measure and monitor your job performance. Alternatively, if you are the owner of a small business the scene may change, but the rules remain the same: the success of your business depends on how well you execute key activities according to the gauge of your business KPIs.
We frequently see small business owners measure their KPI fulfilment according to whether they achieve their business targets, but this is a recipe for confusion between KPIs and goals. Instead, KPIs have their own distinct role to play as part of the process for generating profitable sales.
KPI = A metric or unit of measurement used to gauge the level of performance, e.g. cost per order.
Goal = A target or objective intrinsic to your business strategy, e.g. increase sales to $1m p/a.
With this in mind, here are
1. Ascertain your business goals. Your KPIs must be linked to your goals.
2. Use a flow chart. Map specific operations of your business and identify any processes that need refinement. Ask yourself what steps need to be taken to ensure the business achieves its goals.
3. Set the KPI for each process. For example, deliveries should arrive within 1 hour of dispatch.
4. Tell everyone involved about the KPI. Staff or contractors involved in that process must know what is being measured, how it is calculated and more importantly, how their role contributes to achieving the KPI.
5. Regularly review. Always monitor your KPIs to make sure they are successful.
Remember: If you can’t measure it, you can’t manage it!
By following these 5 steps and circling back periodically to review and repeat as necessary, you’ll be well on the way to meeting more of your targets and achieving overall success.
Originally written by – Doug Mitchell