4 things every business owner should know about KPIs
Owners go into business for different reasons. Some were fed up of being an employee and wanted to be the employer. Some wanted control of their lives and to build wealth. Some knew they could deliver something better than what was on offer.
Whatever the reason, four things about KPIs decide whether the business makes money. Getting the right KPIs in place is one of the first jobs we tackle in business coaching with Liverpool owners.
1. Profit depends on the team doing the critical activities consistently
Break that down. Every business has a handful of critical activities. Name yours.
Then measure how each person performs on them, and how consistently.
2. People perform best when their work is measured and moves the bottom line
Plenty of owners tell themselves the same two things. “I know I need to tell my team more.” “I know I need to share what’s in my head.”
A one-person company only needed you to know the plans and goals. Add a team and that has to change. Keep the goals in your head and the business fills the gap with guesswork. That’s how you get chaos.
Share what’s in your head. Involve the team in the business goals. Building a winning team is part of mastering Leverage, one of the 6 steps to building a better business.
Your team only knows what you tell them. Tell them the plan.
3. Small changes in the critical areas make a big difference to profit
Know your margins. Know your breakeven point. Know your conversion rate.
Know them properly and you’ll see it straight away. A small percentage lift in one area moves profit a long way. Lift ActionCOACH’s five profit levers by 10% each and profit rises by 61%.
4. What gets measured gets done. What gets rewarded gets done again
“I know my team are working as hard as they can.”
“I know they’re hitting targets.”
Do you? Check how you measure three things: your own performance, the team’s, and each person’s.
Then look at your reward and bonus structures. Rewards can be more than money. Hold regular reviews and performance meetings and you’ll know each person’s personal goals.
Reward their achievements by helping them towards those goals.
The act of recognition often counts for more than the reward itself.
So, did you know all four? And are you acting on them?
If the answer to either is no, you now know where to start. The results our clients achieve show what happens once the right measures are in place.
Book a free strategy call with an award-winning business coach in Liverpool and we’ll pick the handful of KPIs that move your bottom line fastest.
