Smooth Sailing with KPIs
Now that you understand the importance of analyzing data, and maybe even made some changes to your operation, how do you know if the changes you made are working? In this post we’re exploring the importance of identifying Key Performance Indicators (KPIs) to measure your business’s success.
What is a KPI?
KPIs are specific, measurable data points that can help you track the progress of your business towards its goals. By identifying and tracking KPIs, you can track areas of your business that are performing well and find which areas need improvement. This allows for targeted decision making and course corrections.
KPI Examples
Choose KPIs that align with your business objectives. Below are a few common KPIs that many industries track, sometimes without even realizing they're doing it:
Revenue: The revenue KPI measures the amount of income generated by your business. This one is pretty simple - is revenue going up? Are you meeting your revenue goals each week/month/quarter?
Payroll to Revenue Ratio: Measures the portion of revenue that was used to cover payroll expenses. If that ratio is too high or too low, you may have a problem! Are you spending wisely on your team? Do you have the right person in the right job role to maximize revenue?
Inventory Turnover Ratio: Measures how often inventory is sold and replaced over a specific period. Do you have a good handle on inventory management? Has your sales & marketing strategy been effective in moving product?
You should regularly track and review your KPIs to assess your progress- consistency is key. Use this information to make adjustments to your strategies and operations. By focusing on the right KPIs, you can ensure your business stays on track and continues to grow.
