How To Use KPIs For Business Growth
You probably know by now that we are not your typical accountants.
We wanted to step away from the ‘stereotypical’ accountancy firm, and one of the ways we’ve set ourselves apart is by truly believing in our clients, genuinely wanting them to grow and flourish.
So we became experts in business growth.
When it comes down to it, much of business growth is driven by setting and achieving goals, and one of the ways we do this is by using KPIs.
Key Performance Indicators (KPIs) are the key indicators of the progress you and your business are making towards your end goal.
Managing your business with KPIs allows you to track efficiency, quality, compliance, behaviour, economics, performance, the list goes on!
KPIs help provide strategy, an analytical basis for your decision making and help focus attention on what matters the most.
The Importance of KPIs
To put it simply, by measuring something, it becomes possible to assess whether you’re on target to meeting your goals within your decided time period or not.
This is what a KPI should do.
KPIs can be used for both personal and business growth, but for now, let’s focus on using KPIs for business growth only.
So, why should you use KPIs when growing your business?
KPIs have the ability to highlight any problems or predicaments, which are normal during the start-up phase of business but are best to resolve before scaling up.
KPIs also connect the vision, mission and objectives of each department within the company, which is particularly important when growing a remote working team. Although it sounds cliché, your whole team need to be working towards a common goal, and KPIs can help keep this clear for everyone.
Not only does this help you grow your business, but it also helps your employees grow along with the business, see the end goals to which they are working towards and understand what actually matters to you in the first place.
Focusing on the right KPIs
We’ve spoken about setting the right goals, but focusing on the right KPIs is equally as important.
We can do this by setting SMART goals:
Specific: it must be unambiguous
Measurable: it must be consistently quantifiable
Agreed: it must be fair for all parties
Realistic: only set achievable targets or goals
Time Related: set a start and end date for review
Leading and Lagging Indicators
If you’ve already explored KPIs, you’ve more than likely come across the terms leading indicator and lagging indicator.
So what is the difference between the two?
Leading indicators tend to influence the end results while lagging indicators are results from decisions and actions taken in the past, a report of the success of those decisions and actions.
While both of these are important, your focus should be on leading indicators, as these will have a direct influence on the lagging indicators.
Take some time to sit down and visualise the end goal of your business. What do you need to do to achieve that goal? What are the milestones along the journey?
Choose a few KPIs for each goal, and work your way back through lagging indicators, working towards leading indicators.
Once you’ve set out your KPIs, be consistent in measuring and keeping track of them.
Keeping track of your KPIs
Keeping track of your KPIs regularly is essential in the growth of your business.
There is no point in setting KPIs for your business if you’re not going to review them on your decided schedule, whether that’s weekly, monthly, quarterly, bi-annually or annually.
One of our favourite tools for keeping track on our KPIs and the roadmap of Cone is Trello, an online collaborative workspace with comments, power-ups and due dates, which the whole team has access to.
One of our values here at Cone is that you have to be adaptable.
It’s important to remember when setting your KPIs that it may be necessary to adapt, update, change or entirely scrap it if the original purpose no longer fits the end goal.
Simply put, KPIs should not be static, and the purpose of the KPI should always be reviewed when updating the roadmap or goals of your business.
About the author
Evie Cox is the Virtual Office Manager here at Cone. She loves wearing many hats in her role, with day to day jobs ranging from general office admin, developing graphic content for web and social media, and writing the odd blog here and there.
Evie loves yoga and meditation, being beside the sea, and shares her home office with her DaxiJack pup Rosie!