KPIs – What are they, and Does My Business Need Them?
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!
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