As a small business owner, I’m sure you’re spinning a lot of plates. However, staying in touch with how your business is doing is crucial amid the chaos.

Imagine having a handy tool that helps you measure the health and success of your business.
These are exactly what Key Performance Indicators are (KPIs).

Key Performance Indicators help you establish, track, and analyse your business success. They provide valuable insights that can shape decisions, enhance efficiency, and fuel business growth.

Let me provide a more detailed explanation:

What Are Key Performance Indicators?

Key Performance Indicators (KPIs) are metrics that give insights into your business progress. They’re like your business cheerleaders, guiding you towards success.

KPIs come in all shapes and sizes, tailored to your industry, organisation, and specific objectives. Whether you’re focused on finances, operations, customers, or your team’s performance, there’s a KPI for everything.

KPIs help you keep your finger on the pulse of what matters most to you. Here’re some examples:

Financial KPIs: These metrics measure how well a company is doing financially. They include turnover growth, profit margins, Return on Investment (ROI), and cash flow.

Operational KPIs: These indicators show how smoothly operations are going in your business. For example, production output, delivery time, and stock turnover.

Customer KPIs: These metrics measure how happy and engaged your customers are. Examples include customer retention rates and your average response time to customer enquiries.

Employee KPIs: These indicators measure how well people perform in an organisation. Examples include sales targets, productivity metrics, and employee satisfaction surveys.

Tips To Establish Key Performance Indicators

My favourite way of selecting KPIs is by using the SMARTIES framework.

SMARTIES goals are like a supercharged version of the SMART goal-setting framework. They take things up a notch by adding extra criteria to make goals even more effective and comprehensive.

Let me break it down for you:

S is for Specific: Make your goals crystal clear and leave no room for confusion or doubt.

M is for Measurable: Make sure your goals are measurable with metrics, so you can track your progress objectively.

A is for Achievable: Set goals that are realistic and attainable. Consider your available resources and capacity.

R is for Relevant: Align your goals with your overall objectives and what truly matters to you and your business.

T is for Time-Bound: Give your goals a specific timeframe or deadline to create a sense of urgency. It will help to hold you accountable.

I is for Inspiring: Make your goals motivating and inspiring to ignite a fire within you to take action.

E is for Exciting: Infuse your goals with a sense of excitement and passion. When your goals are exciting, you’ll be motivated and eager to bring them to life.

S is for Success-Oriented: Push yourself beyond your comfort zone with goals that challenge you.

By including these additional criteria, SMARTIES goals provide a powerful framework for setting goals and managing performance more effectively.

Examples of SMARTIES goals include:

“I will, on each working day in June, contact five business owners from my CRM system. The ideal outcome of each call is to generate four sales meetings to take place before the end of July.”

Or

“I will complete reconciling all outstanding invoices over the value of £50. I’ll have the information the accountant needs by the end of this week.”

What To Avoid When Establishing Key Performance Indicators

While establishing your KPIs, I recommend you avoid what I call SKITTLE goals. This is an acronym representing qualities you want to avoid when setting goals.

Let’s break it down. Your goal-setting should avoid being:

Senseless: Goals should have purpose and meaning. They should not be arbitrary or lacking in significance.

Killjoy: Goals should not drain your enthusiasm or happiness. Instead, they should inspire and energise you.

Irrelevant: Goals should not distract you. They should be aligned with your values, aspirations, and overall objectives.

Tedious: Goals should not be monotonous or boring.

Trivial: Goals should not be too small. They should be meaningful and challenging.

Lacking: Goals should be well-defined, leaving no room for ambiguity.

Exhausting: Avoid burnout and maintain your well-being. Goals should be challenging but balanced.

Self-Defeating: Goals should not hinder or undermine your self-worth. They should be empowering.

For example, don’t set goals such as “Finish accounts work” or “make sales calls”. These are too vague, with no deadline or metric.

Focus on your SMARTIES goals and avoid SKITTLES!

Use The Right Tools

Keeping track of and analysing your KPIs can feel overwhelming. That’s where the right tools can help.

Here are my recommendations:

Automation Tools: These tools collect information from different places without entering it manually.

Some examples of these tools are CRM systems like Pipedrive, which help keep track of customer information, and accounting tools like Xero.

Visualisation Tools: Visualisation tools help you pick the most important numbers, create personalised displays of information, and show data in a way that makes sense visually.

For example, I’ve found tools like Fathom can work really well, as they combine financial and non-financial KPIs together in one place.

Collaboration Tools: Successful KPI tracking relies on working together. The proper tools support smooth teamwork by allowing data sharing and assigning and tracking tasks. Some useful collaboration tools are communication tools like Slack or project management tools like Asana or Trello.

Predictive Insights Tools: Some tools offer advanced analytics, such as examining trends, making predictions, and forecasting. These features go beyond just looking at past data and give you valuable information about future performance. However, for those just getting started, I would avoid these for now.

As a small business owner, you can unleash your business’s full potential by incorporating KPI tracking into your regular routine.

Remember, what gets measured gets managed, and what gets managed gets improved.

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