We’re here to discuss all about KPIs. In the following paragraphs, you’ll read all about the meaning of KPIs and how you can use them in your business. But first, the burning question…what is a KPI?
KPI Explained
Key Performance Indicators, or KPIs, are the critical indicators of progress toward an intended result. In other words, they are the units used to measure progress toward a particular goal.
As a business owner, it’s important to look at various KPIs to see how well your business is progressing. Managing with the use of KPIs includes setting targets (the desired level of performance) and tracking progress against those targets.
Why are KPIs Important?
KPIs are important because they are useful in managing employee accountability with expectations and priorities, forecasting, implementing strategy adjustments, and assessing the health and profitability of your business.
Just as KPIs have many benefits, there are also many ways to approach them. In other words, KPIs aren’t a one-size fits all, but they do tend to fall into a few categories.
The Different Types of KPIs
Creating the right KPI is about capturing the most important details and making sure you’re tracking those metrics. Some KPIs are high-level, while others are low-level within an organization. Some KPIs focus on short-term goals and others focus on long-term goals.
Creating successful KPIs
Choosing the best KPIs for the job is a process. Before deciding on a KPI, make sure it’s tied to a strategic objective. Define your business objective. Here are some questions you can ask yourself:
Why is this important?
Who is responsible for the outcome?
How will progress be measured?
How often will you measure progress?
How will you know if you achieve your goals?
Once you have identified your KPIs, write them out and keep the language super simple. Everybody should be able to understand what your KPIs measure and how to interpret them.
Amend KPIs Over Time
Creating and tracking KPIs isn’t a one-time and forget-it thing. It’s important to keep the process moving and amend your KPIs when necessary.
An additional importance of amending your KPIs is to gain a better idea of where your business stands and where your improvements can be made.
Partnering Together
At Redmond Accounting, we know that you want to feel confident your business is growing and moving in the right direction. Defining your goals and understanding the performance and health of your business so that you can make critical adjustments in your execution to achieve your strategic goals is important.
We understand that being a business owner pulls you in many directions and sometimes you just need a little help. Whether you need checklists, guidance on what accounting software to use, or would like your accounting done for you, we’re with you every step of the way. Schedule a complimentary consultation so we can learn more about your business’s needs, today!
Small businesses often face unique accounting challenges that differ from those of larger businesses. The differences between small business accounting and large business accounting are mainly due to the size, complexity, and regulatory requirements of the business. Small businesses have simpler accounting needs, while large businesses are more complex. Small businesses typically have fewer employees and lower revenue, while large…
RAI presents Finance 101 at Square's "Open for Business: Celebrating Women Entrepreneurs" even in SF. On International Women’s Day, the world will celebrate the accomplishments of inspiring women around the globe. On March 10th, Square wants to celebrate you -- amazing women entrepreneurs and business owners in our community. We'll start the evening off with a talk from Go Mighty…
How Outsourced Accounting Can Benefit Your Business Would you benefit if every task of your business could be streamlined, allowing you to spend more time focusing on building and growing your business? Of course, you would. So many of your everyday tasks evolve around things that maintain your business and not GROW your business. If you’re spending hours a week…
How Accounting Technology Can Benefit Your Business Innovation and invention are born out of need. The need to help, the need to change the world, and the need to fix problems. In the 1880s, William Seward Burroughs invented the first adding machine because he didn’t want to continue to count numbers at his bank job tirelessly. The product took the…
Do you own a small business? If so, you know that there is always something more you can do to improve how you run your business. You might update a product or service; maybe you found a better way to be more productive; it can even be as simple as finding the most cost-effective way to print something. Today, because…
Is Accounting Automation Worth It As a business owner, you have a lot to do. You’re always keeping an eye out for ways you can save some time and money. But be honest with yourself and admit that there might be a better way to automate and grow your business. Using automated accounting systems may allow you to focus more…
4 Trends in Accounting Technology As accounting technology experts, you know we love technology and statistics. Our article titled “How can an accounting technology expert help your business?” gave a list of statistics that showed how far accounting technology has come and how beneficial it is for businesses of all sizes. One of those fun facts was that businesses who…
How Bill.com Can Help Your Small Business Accounting As a small business owner, you probably (most likely) run every part of your business. You don’t just do the services or make the products that started your company. You do the marketing, social media, accounting, and more. Even if you have a small team, you’re still probably wishing you had more…
Accounting technology and software have seen extraordinary growth year after year. As a business owner, are you sure you’re up to date and using the best accounting technology in order to save time, money, and reduce errors? As a business owner, you want to work smarter and more efficiently. In our last article, we discussed accounting technology in detail. In…
