Growing a business:
Key performance indicators
One way that you could use to monitor the performance of your business is through 'key performance indicators' or KPIs. These might not necessarily be figures out of the profit and loss account or balance sheet, but could more accurately reflect the position of your business. An estate agency, for example, might want to monitor:
- the number of houses up for sale
- the number of houses sold subject to contract in the month
- the number of houses where the contracts were completed during the month
These figures give an earlier indication than turnover of how the business is doing.
There is an art in selecting your KPIs. They need to:
- focus on elements essential to the success of the business
- be measurable (so 'increased customer satisfaction' would not be a good indicator unless it was defined in terms of some other factor such as reducing the number of complaints or returned goods)
- be capable of comparison (and so if, for example, debtor days is a KPI you would need to define how it was calculated, and what was included in turnover)
You should select only a few KPIs, and ensure that they cover the key areas of the business, such as your working capital, sales and costs.
It might be possible to extract many of the KPIs directly from your accounting system, and we can help you with this.
 | |
Where next?
Within How is your business performing...
Within Growing a business…
General...
- Contact us about this issue
- Read about how we can help you & your family
- Request a meeting with us
