What are KPIs and why does your business need them

It can be tough to keep an eye on how your business is performing over time. One way to track your business is to use Key Performance Indicators (KPIs). 

A KPI is a clear and short statement that sets out what you want to change or improve in your business and has a defined deadline for you to do it by. They're a way to measure your performance over time and how well you're achieving the goals that you set. 

You can use KPIs at different levels in your business. High-level KPIs might focus on bigger things like sales or revenue, while low-level KPIs might focus on smaller areas like employees or marketing.

An example of a high-level KPI could be: 

Increase the number of return customers to 1,000 by May 2020. 

An example of a low-level KPI could be: 

Increase the number of Instagram followers by at least 20 every month for next 6 months. 

KPIs are a useful tool for growing your business. By having a set of defined and measurable goals you're able to clearly see where your business is succeeding and where you need to focus your efforts. 

And with clear objectives and deadlines you can also boost your (and your employees) productivity as you have something to work towards and something to celebrate when you succeed.

It's important that any KPIs you write are realistic, clear and measurable. They also need to support you in achieving your core business objectives. So first, ask yourself: 

• What outcome do you want from this KPI?
• Why does it matter to your business?
• How are you going to measure the progress you make?
• How can you help yourself to achieve this KPI?
• Who will be responsible for this KPI?
• How will you know you’ve achieved it?
• How often will you review your progress?

Once you have the answers to these questions you can write a clear and short KPI statement that summarises what you want to achieve. The best KPIs follow what is known as the SMART format – they're Specific, Measurable, Achievable, Relevant and Time-bound. 

If we take a look at the high-level KPI example from earlier,  you can see it also uses this formula: 

Increase the number of return customers to 1,000 by May 2020.

1.Share them with others

Writing your KPIs is only the beginning. Once you've got them down on paper you need to make sure everyone in your business knows about them.

This could mean sitting down with your employees to:

• share the KPIs
• ask for feedback on them
• change any that need changing
• and then decide who in your business will be responsible for them.

Or, if you own and run your business by yourself, you could share your KPIs with your friends or peers and ask them to hold you accountable for achieving them. 

2.Check your progress regularly

It's important to set aside regular time to check your progress. Depending on the size of your business – and the amount of time you've set to achieve the KPIs – this might be a weekly, fortnightly or monthly check in. 

3.Review your KPIs when they're complete

Finally, you should regularly review if you've set the right KPIs. Remember, they need to be a balance between being achievable and ambitious. If you're consistently smashing your KPIs they could be too easy, or if you're consistently missing your deadlines, they might be too unrealistic.