Be the master of

your business with

key performance indicators (KPIs)

You've already done the hard thing: you decided to start your business.

You went from nothing to something, and making that giant leap is probably the most daunting, if not difficult, thing you’ve ever done. Running a business is a challenge every day. Sometimes it’s a satisfying challenge. Sometimes it’s, well….

It’s up to you to make the choices that will help your business grow and succeed. 

But how do you know if you're doing what is right for your business? Your staff? Your bank account? The answer: you decide what’s important to your success and you measure it—and you do it often.

Key performance indicators (or KPIs) are the tools that help you do just that. KPIs aren't just for big businesses and corporates. They’re critical for small businesses and start-ups to set and track. so you know how your business is performing in its most important areas.

Getting started with KPIs may seem overwhelming. We’re here to break things down and take you through the process step by step.

KPI stock image
KPI Pillar 4 Getting started 9 Spokes

First things first… What are KPIs?

KPI is an abbreviation for key performance indicator—and while that doesn’t sound too exciting, give us a chance to explain why it is.

KPIs are numeric markers for how your business is doing. OK, let us try again. If something is important to your business growth and you can measure it, you can set a KPI that essentially tells you how well your business is doing at that activity.

While it sounds like technical business jargon, KPIs are wonderfully simple, and at their best when they can be summed up in just a few words.

Your key performance indicators signal how well you're doing at achieving the objectives you’ve set for your business, like “growing annual sales”—it says it all and sets a tangible aim and focus for the immediate future.

KPIs aren’t just about winning. They provide the most important data about your business and tell you if you're on the right track, true, but also act as a warning signal when you're not. When set correctly, KPIs offer full clarity about your business performance. With the right data, they never lie.

But that’s just scratching the surface. Below, we’re going to go through everything you could ever need to know about setting KPIs, some KPI examples, essentials, tips, tricks and tools. Ready? Let’s go!

Four essential ingredients for your KPIs

There are a few must-haves when creating great KPIs for your business. Once you have an idea of your area of improvement and want to develop a relatable KPI, you’ll need to take into account the following four things:

  • What you measure
  • The duration
  • Your target
  • Your source of information
KPI Pillar 3 Essential ingredients 9 Spokes

Measure

You’ll want to be as specific as possible when determining what business metric to measure. And you’ll want to make sure it’s the most useful measure when it comes to determining whether or not you’ve achieved your goal.

For instance, if you want to measure Facebook engagement, you might decide to focus on how many people liked, commented and shared your posts, over say the number of impressions you’ve made.

You shall also decide on what form this measure will take—will it be a number (say, the number of new customers) a percentage (the percentage of new customer growth) or something else entirely?

Duration

Just as important as what you’ll measure is how often you’ll measure it. You can’t have a plan to increase gross profit without knowing when you’ll start and finish measuring your gross profitability—the point you’ll start measuring from and when your KPI will be met.

You’ll need to determine the duration you’ll have to meet your KPIs to give yourself a chance to meet your target.

Also, once you set a duration, establish how often you’ll sit down and check in on your KPIs (most likely as a team). If you have a quarterly KPI, you might decide to do this monthly, or even weekly.

Target

Speaking of which, your target is the value you want to achieve—100 online sales in a week, 20% monthly newsletter open rate, 100% project completion by the end of the year.

Your target should be set with frequency in mind, so you can base your numbers on how long you have to achieve them. You might also base them on creating steady improvement from previous periods—more sales this quarter than last. To make this easier and more accurate, make sure you have apples-to-apples comparisons (it may be unrealistic to compare a short month like February with a long month like March without averaging out the days, for instance).

Like all goals, your KPI target gives you something to aim for, so try and find the fine line between realistic and ambitious.

Source of data

What are your means for collecting and reviewing data on your KPIs? Make sure this is determined from the outset so you and any other stakeholder know which hymn sheet to sing from.

You might decide to rely on your CRM to collect new customer data, your POS platform to secure your sales numbers, or your project management software to track completion rates. Ideally using a digital source of data, you’ll find it simpler and quicker to pull together information, so you can even catch up on your KPI progress more regularly without too much hassle.

To track KPIs easier, also consider a data dashboard—although we’ll talk more about the benefits of those shortly. 

Need some KPI examples to get started?

The easiest way to break through the jargon is to see some real-life examples of how businesses use KPIs. Although they vary by industry and business, we think we can give you some broad ones you might choose to focus on.

  • Financial KPIs: such as cash position and coverage, gross profit, and current ratio.
  • Customer KPIs: like response rate, customer churn, and customer engagement.
  • Sales KPIs: like sales by channel, sales per representative, and daily, weekly or monthly sales revenue.
  • Marketing KPIs: like email click-through rate, monthly website traffic and social media engagement.
  • Project KPIs: such as project completion rate, overdue tasks, and percentage of projects on budget.
  • Employee KPIs: like staff turnover rate, sales staff performance, employee satisfaction.

Why are these good KPIs? Because they’re SMART. And your small business needs all your KPIs to be SMART if they’re going to be effective.

KPI Pillar 6 KPI examples 9 Spokes
KPI Pillar 5 SMART KPIs 9 Spokes8

Setting SMART KPIs

Maybe you've heard the acronym SMART before. It stands for SPECIFIC, MEASURABLE, ACHIEVABLE, REALISTIC and TIMELY—and it's ideal for creating great KPIs.

Let’s dissect our gross profit KPI example using the SMART criteria and a hypothetical situation for setting that KPI:

  • SPECIFIC: Our KPI is how much profit we’ll make from selling our products minus the cost of making them. Specifically, our goal will be to grow our gross profit by 10% annually.
  • MEASURABLE: We’ll measure this as a percentage growth annually. We can pull this info easily from our accounting software.
  • ACHIEVABLE: 10% growth is a lot to some businesses, but in this scenario, we’ve based it on last year’s 8% annual growth. We’ve got some exciting projects launching this year, so we think it’s manageable.
  • REALISTIC: Achieving growing gross profit is an important part of our business goals, which is why we set this KPI. It broadly signifies financial success in our fledgling company.
  • TIMELY: Our KPI will last throughout the year. Senior management will check up on it in quarterly meetings, though track it month by month.

Get into the KPI mindset

Another great thing to do when setting your KPIs is to get into the right mindset. For some people, KPIs are brand new and it’ll be the first time they’ve set some; other people will be looking to take their KPIs to the next level. From planning to setting and managing your KPIs, here are some good habits to get into:

  1. Be bold: Sure, ACHIEVABLE and REALISTIC are important factors in setting SMART KPIs, but aim for the ambitious side of those criteria. It’ll push you and your team more than you might realise.
  2. Always be tracking: If you’ve set the right KPIs—ones that define your business success—you won’t be able to help but look at your progress. It’s important to set regular times (weekly, monthly, quarterly, etc.) to officially go over your KPIs with the relevant teams. But you might want to unofficially track them more regularly, too.
  3. Get others on board: When the staff members who are responsible for hitting your KPIs are fully on board, you’ll have the absolute greatest chance of success. So, consider taking in their feedback when setting your target, and incentivise success.
  4. Think critically: Understand what your KPIs are telling you, and learn from that. If you see a drop in your sales KPI number, first consider things like seasonal variation and market trends to understand the “why”. Digging a little deeper will help you with future KPIs.
  5. Don’t forget your metrics: And while we’re on the subject of “digging deeper”, use business metrics to tell a stronger story of why your KPIs are tracking a certain way. If your sales are suddenly booming, metrics around website conversion rates or sales staff performance might hold the answer. Think of your KPIs as your overall business health, and metrics as the symptoms.
KPI Pillar 6 The KPI Mindset 9 Spokes

KPI tools you shouldn’t live without

A decade or so ago, finding out how you’re progressing with a KPI used to take time, effort and considerable skill. You’d have to crunch the numbers, so many businesses simply didn’t bother. Today, there are incredible KPI tools that crunch the numbers on your behalf, meaning it’s never been easier to track your KPIs—you can bet many of your competitors today are doing just that.

Business apps are the data collectors. On top of being incredibly efficient and powerful ways to automate parts of your business, apps collect heaps of data. Accounting software, for instance, pulls together scores of financial data for your money-related KPIs. Customer-relationship management tools do the same for your customer KPIs. And eCommerce and sales apps pull all the info together for your sales KPIs.

However, that’s only half the job. For tracking your KPIs on the fly, you need a great way to visualise this data. You’re going to need a data dashboard—and we’re here to tell you why.

Your KPI dashboard for your business

A KPI dashboard is the best way to monitor and report on your KPIs. As a KPI tool, your data dashboard takes all the information you generate while running your business and turns it into visual representations of all your KPIs and metric data. That means every sale you make, every marketing effort, each expense claim you approve, it all gets turned into charts, graphs and lists accessible on one single display.

That’s what 9 Spokes is all about. It’s a dynamic, interactive visualisation for tracking business performance—whether that’s your sales KPIs or the metrics that tell you “why” something might be the way it is.

Your 9 Spokes dashboard works by connecting securely to your business apps, and pulling data from lots of them at once. At a glance, you’ll see how you’re tracking towards your business goals. You’ll see all your business information side by side, making it clearer to see what factors are impacting your KPIs. With all your data at your fingertips, you’ll make smarter decisions that help your business grow.

Just like your apps, your 9 Spokes dashboard is cloud-based, so you can login anywhere, from any device. You’ll never be too far from the data you need to make your KPIs the MVP of your business.

startup data dashboard

Get started with 9 Spokes for free today. Many of our app partners offer free tools and trials
so you will only pay for the premium apps you choose to connect.

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