However beautiful the strategy, you should occasionally look at the results. – Winston Churchill.
How do you measure success? I’d like to introduce you to Key Performance Indicators (KPI’s)
In my businesses, I’ve always been a numbers guy – detailed budgets, frequent measurements, etc. So I was surprised to learn how much variety there is among business owners when looking at their company’s performance.
Most business owners have some way they measure performance. Some look at daily or weekly sales. Some know how many units they have to sell in a month to pay the bills. Some just look at their checkbook – if there’s money there, they are happy. If not, it’s gloom. The fact is, that all of these can work to a degree. The goal is to find KPI’s to measure what’s going on in your business in order to create strategies to improve it. You can’t change what you don’t measure.
KPI’s don’t have to be financial, either. When I was in the restaurant business, we focused on Speed of Service. This was a critical predictor of our future sales. It was not a financial measurement, but critical, none the less.
Sometimes you can measure attitudes – customer surveys. Sometimes you may want to record physical characteristics, such as percent of units meeting quality requirements. Whatever you decide to measure, having KPI’s to track your performance over time will enable you to continually improve.