Key Performance Indicators (KPI) are important measures for performance. For a shop the KPI’s might be number of customers in store or money spent per customer.
How this helps you
Entrepreneurs look at what is going well and make it stronger. Others look at what is going wrong and try to fix it.
What is it?
A Key Performance Indicator (KPI) is a measurable value that helps to determine how effectively a company is achieving its key business objectives. KPIs are the meters that say you are doing well or not. Organisations use KPI’s to evaluate their success at reaching specific targets, usually by tracking KPIs over a longer period of time. Deciding on the right KPIs for your goals may depend on the type of business and industry you are in. And on whether you’re trying to achieve longer term strategic goals, like increasing market share, of more operational goals like daily production targets. KPI’s may be linked to both financial and non-financial targets. Financial targets could be revenue, cash flow or profit. Good examples of nonfinancial targets are the number of employees, the number of product introductions or the frequency of repeat purchases from customers.
How does it relate?
It is always important to keep your goals in sight. Applying a measure to track your business progress against helps you to understand if you’re on the right track. If you check your progress regularly, you may find out where and when you need to take corrective actions. KPI’s are about focusing on the ones you most often need to check.
Your next Waypoint
Learn more about different KPIs frameworks and how these could best apply to your company. Decide which indicators of good performance may best apply to your business and find a way to monitor those. Here’s a great article to help you determine the right KPI’s for you: kpilibrary.com/5-steps-to-find-the-right-measures.
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