“If you aim at nothing, you are sure to hit it every time” – Frederick Douglass

Establishing Effective KPIs and Goals for Business Success

Key Performance Indicators are used as crucial tools for any business, providing a means to assess the effectiveness of various activities within an organization. However, KPIs are different from goals. It’s important to distinguish between the two: Goals represent the desired outcomes, while KPIs are the metrics that gauge the efficiency of efforts towards achieving these goals.

Understanding KPIs

KPIs are not vanity metrics such as the amount of money raised, the number of page views on your website, the number of followers, or the number of downloads. Rather, a KPI is a quantifiable measure that indicates how well a company is achieving its key business objectives. KPIs serve as a compass, guiding the company towards its goals and motivating its employees to strive for excellence. They also facilitate task delegation, as each KPI is typically associated with a specific aspect of the company.

While KPIs and goals are often number-driven, it’s equally important to understand how the collective efforts of the company contribute to these metrics. This involves identifying the individuals responsible for each KPI or goal and understanding their roles. It’s not just about managing numbers, but also about managing people.

If you find yourself asking, “Why am I doing this?” and can’t link the activity to a specific KPI or goal, it’s likely that the KPI or goal in question needs to be reassessed. KPIs and goals should be co-created, with input from leaders across the organization. This encourages a holistic view of the business, rather than a siloed approach.

When setting KPIs and goals, consider the following aspects:

1. People: Who are the team members? How do you keep them engaged?
2. Share of voice/market share: What is your business? What actions are being taken to achieve a certain market share?
3. Retention: How do you retain your customers?
4. Operational Efficiency: How efficient are you in your sector?
5. Sell! Sell! Sell!: Combine the human aspect of selling with digital strategies (e.g., online advertising).
6. Find the Money: Identify inefficiencies within the company to save money intelligently.
7. New Revenue Streams: Diversify to discover new sources of revenue.

While the added work of creating goals and KPIs to support reaching them might seem daunting at first, the effort is well worth it as establishing a process with accountability and measurable progress will enable companies to better leverage their resources to focus on the primary objective. Companies such as Google have used KPIs and goal-setting to grow their business. For those just starting out, a helpful resource is Measure What Matters, by John Doerr.

Setting KPIs and goals may seem daunting, but with the right support, guidance, and alignment within the company, they can pave the way for success, particularly for startups and entrepreneurs looking to establish a business.

This post was written by  Jeffrey Camp.