Could you drive your car safely without a speedo? Unlikely. In fact, what would happen if you got some gaffer tape and covered over your speedo, your fuel gauge and your GPS? Well, one if not all of the following – you could receive a fine for speeding, run out of fuel, or get lost.
It’s odd then that many of us would not drive our cars like that but would happily drive our businesses without any feedback. That’s not entirely true, most people drive their businesses through their bank accounts. But isn’t that like saying ‘great, I’ve got some fuel, I’ll keep driving’ without any reference to where you are heading or how long it’s going to take?
So, it follows that having the right Key Performance Indicators (KPIs) in our business will give us a far greater chance of getting to our destination – right? Right. So what KPIs should we use?
That is quite a big question, for it depends largely on what it is you are trying to achieve. Are you planning on growing the business to sell? Go on holiday next year for 10 weeks? Buy another premises? The point here is that once you have clarity on where you are going you can choose the most relevant KPIs.
First question – do you know where you are going? I mean, really know where you are going. And if you do, do you have a budget and some forecasts? Have you modelled your business to see what happens if, say, income increases by 10%, or decreases by 10%. With Brexit just around the corner no-one knows what will happen so modelling potential outcomes is a good idea.
Having done that, it will start to highlight those things you will need to keep an eye on, and how often you need to look. Some daily, some weekly, some monthly. Here’s a selection of some often used KPI’s (but this, of course, depends heavily on your outcome):
- Weekly income
- Monthly income
- Monthly cash balance
- Monthly new enquiries
- Monthly – average value of new customer
- Monthly – conversion rate of enquiries to new customers
The whole thing becomes many times more meaningful when the reported figures are then compared to budgeted figures. Having done so, it allows you to gain pin-point focus on what needs to be looked at. But the key here is to create a hierarchy. It’s easy to create a massive list and get info overload. But pick your top 3, just as you do in the car, speedo, fuel, GPS, and if they are on track you are most likely on target.
Give us a call if you want to talk your precise circumstances through. Always happy to help with setting budgets, goals and then making a marketing plan to achieve them. 01326 66 00 22