what are KPIs?
The old adage of ‘what you can measure you can manage’ is very true. The simple act of paying attention to something will generally mean that you’ll improve in that area.
KPIs are a set of figures which measure the performance of a business in key areas, compared to its targets or benchmarks.
They’re not restricted to measuring financial performance and are often used to measure:
- customer care
- quality of product
- effectiveness of marketing
- productivity of team.
Used properly, KPIs are an invaluable tool for business owners.
how do businesses choose their KPIs?
KPIs will vary from business to business.
The start point is to understand what you are trying to achieve. For example, a business may need to increase its customer base, improve its cash flow, reduce waste etc. These are known as critical success factors.
Once these have been identified, it’s then a matter of developing a way to measure performance. Useful KPIs for a company needing to improve its cash flow could be:
- number of days customers take to pay
- number of days it takes stock to be turned into sales
- number of days taken from receipt of order to dispatching goods.
It’s essential for businesses to choose the right KPIs – there’s no point in measuring something well that doesn’t need measuring at all.
It’s also better to concentrate on just a few KPIs and take action – use the information they give you to improve your performance.
how can Mitten Clarke help?
Our KPI reports are specifically designed for you. Reports will include invaluable information which can’t be found in management accounts. Typically they can include:
- profit drivers – sales, margin and overhead KPIs
- your breakeven point
- cash drivers – debtors, stock and creditor KPIs
- productivity of team
- returns made on assets invested
- customer base analysis
- what if scenarios, identifying your profit improvement potential.
Our KPIs are produced graphically, with supporting commentary to help you interpret the information we’ve presented.
Our Staffordshire team will agree a timetable and turnaround time with you, so that you have the information quickly enough to make a real difference to your performance.