Being able to measure your sales is overlooked in many small businesses. Implementing structures such as KPI metrics in order to size up your successes and losses is necessary to maximise your profits. Doing this will point out where your business is having issues and help you to achieve your objectives.
Key performance indictors (KPIs) are measurement tools that help analyse the areas of your business that are critical to its success. There are many different KPIs that you could implement, so it is important to find ones that best suit your business. Take into account your existing reporting systems and resources as you do not want to have to implement other measurement tools for each KPI. Doing this can be expensive and time wasting, so make sure the KPIs are easily quantifiable.
Each KPI should directly relate to an area of the business that needs to perform well in order to achieve your business goals. When setting your KPIs consider a wide range of factors from financial, to customer, to innovation that best suits your business.
Some examples of KPIs could be:
- To increase sales by X amount per month
- To decrease the unit cost of sales
- To decrease the acquisition cost of new customers.
KPIs will not only help you to understand the pitfalls and triumphs in your business, they will help your staff to understand this as well. Setting KPIs for individual staff members or departments helps employees to understand the core business objectives. If you have multiple sites this can highlight how different products sell better in different locations, and how each site’s sales differ.
Similarly to performance appraisals and reviews, KPIs can help your employees to know what they have been doing well and what areas need improvement.
Remember that KPIs must be developed for each individual business to maximise their impact and successes, so it may not be useful to copy generic KPIs off the internet.
If you would like to talk to an industry expert on how setting KPIs for your business can help you to achieve your goals then book an appointment through Small Business Smart Business. A 1.5 hour session will only cost you $50.