Growth through KPI's Key Performance Indicators (KPI’s) are set reference points to compare and reflect on your business performance results and will tell you weather your business is moving forward or backwards. By comparing different parts of your business against each other over specific periods your business will produce key trends that enable you to set KPI’s based on your current growth strategies. This enables you to reflect on exactly what is happening in your business over a period of time and then manage it. The purpose of KPI’s is to track your progress against past performance over the same period of time. There are many KPI’s to track eg. Sales, Expenses, Gross Profit, units sold etc however it is important to remember that changes in one KPI can affect another. Analysing the change in specific performance indicators over a three year period enables accurate and achievable budgets for the current year to be set. To be sure your business is moving forward, you can only know this by using performance indicators that track the growth of your business in specific areas. Once you have set the KPI’s identify the key drivers in your business at help you achieve the results such as: Sales drivers eg. enquires, prospects, conversions, average sale, units sold Production drivers eg. staff hours worked as a % of total charged out hours, production output volume per hour Gross Profit drivers (Gross Profit divided by sales) eg. cost of goods sold as a % of sales, wages as a % sales, raw materials as a % of sales Balance sheet drivers eg. Unbilled work as a % of months sales, outstanding creditors as a % of total creditors Tips for improving your business performance: Decide what is important to measure and how often Rank your KPI’s in order of impact on your business Set and measure only four or five KPI’s for your business at a time Set up data collection systems that enable tracking of KPI’s eg. Weekly, monthly, quarterly or yearly etc. Decide how long the KPI will be measured for and what the optimum performance level is Celebrate success when KPI’s are reached Use KPI’s to tell you whats working and whats not. When things are not working you can then ask questions to find out why and fix it. Return to FREE RESOURCES list page.

Current as at:1-Feb-07. © Important & Imperative Business Solutions (I&IBS), 2006.

The writer, Wendy Fogarty, is a Business Growth Consultant who has almost 25 years experience and a dedicated focus on business development through strategic knowledge management. Wendy has worked with many successful SME’s and been involved in aspects of their business development in the Illawarra and beyond. Wendy runs a boutique business consultancy focused on delivering a range of business growth services. Call Wendy today at I&IBS on 0242832221 to find out how she can help to develop and grow your business.

Disclaimer: The information published in the above article is subject to copyright and may not be reproduced in any form without written permission from Important & Imperative Business Solutions (I&IBS). The above article is intended as general information only and should not be relied on in place of specific legal or professional advice. I&IBS accepts no responsibility or liability for any damage which may be incurred by any person acting on this information provided.

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