There is always room for improvement; what may seem perfect can be made even better, and what may seem flawed can be made flawless, but that requires for us to realize or know where the potential for improvement lies or what causes the imperfections, thereby dusting away confusions in our mind on how to do it better.
In this ever-growing competitive world, it is high time every aspect of all business operations is religiously monitored, and ensure all activities and processes complement each other to contribute towards achieving the organization’s major goals.
Key Performance Indicators (KPIs) a set of measuring metrics have been introduced for this purpose; “Indicate how the enterprise performance is moving forward”
Providing motivation and focus point for operational improvement the importance of KPIs are no laughing matter, they help create a base for accurate decision making, and ensure heads are not turned the other way by keeping core attention and focus on relevant and important matters.
Now that you got a glimpse of how important KPIs are, it goes without saying it’s importance and benefits are relevant and useful only if the correct KPIs for your business are used as your metrics or reference indicators. Like how all business organizations are different and dynamic in their nature and operations, KPI measures to vary, but rest assured good KPIs will have some general and common characteristics in them.
Whether you are new to establish KPIs or reevaluating your present metrics, following are the general characteristics to keep in mind to understand what makes a good KPI.
- Simple: Not just KPIs, but anything for that matter needs to be simple to be understandable and doable, thus a good KPI, should be easy to understand i.e., what the indicators are showing us should clear and precise and understandable by all and easily measurable to give a value to those indicators to make the right decisions based on them
- Responsibility: This speaks more of the decision makers than the KPIs specifically. It makes logical sense for appropriate decision makers to be in control of KPIs that are specific to certain departments or operations making the KPI finding more meaningful and easier to make decisions, for they will have better knowledge on what is to be done with the received information.
- Valuable: The results or findings from good KPIs will be measurable or can be given a value to determine and analyze how positive or negative the indicators point the performance to be.
- Practical: An easier term would be “Realistic” meaning KPIs and the goals set for the organization must be practical enough that it is indeed possible for the employees to achieve it.
- Visibility: Transparency among members in an organization is a prerequisite for the successful growth of an organization, as success and progress are achieved better when all employees are made aware of the major goals of the enterprise and even increase employee engagement.
While each company has its own set of key performance indicators (KPIs), there are a few things every small business should be aware of.
- Sales revenue
Most firms use revenue as the initial KPI to determine their success and market demand. The income from all client purchases is referred to as sales revenue. To get the final sales revenue outcome, remove returns or undelivered services from this income.
- Net Profit
The amount left over after all expenses, such as cost of goods sold, operational expenses, and debt, have been accounted for is known as net profit, often known as the bottom line or net income.
- Gross Profit
Gross profit is related to net profit. The variable expenses associated with generating revenue are only considered when calculating gross profit.
Gross profit margin (GPM) is a metric that indicates how well a product, or a group of items, performs in your firm. You can fix any potential weakness in your business before it becomes an issue by keeping an eye on your gross profit margin.
- Customer Acquisition Cost (CAC)
The cost of acquiring a consumer to purchase a product or service is referred to as the Customer Acquisition Cost (CAC). Customer acquisition expenses are frequently linked to customer lifetime value as a significant unit economic.
By evaluating the small company KPIs that relate to your goals, you can ensure that your thriving firm is also growing. You can discover errors and rectify them before they have a detrimental impact by routinely checking your KPIs.
Customer service KPI dashboard is a place where managers can access data in real-time and evaluate the performance indicators much more accurately, connect with CEO Analytix to get know more about the right KPI dashboard for your organization