Many fast-growing businesses find it difficult choosing the right KPIs to measure, especially ones that will be attractive to investors.

KPIs should be easy to understand, balance short and long term needs, and must be something businesses can measure and report on in a timely manner.  Above all, KPIs should align with a company’s objectives and be limited in number to keep a business focused on its highest priorities.

KPIs are vital for businesses as they can identify where your business is going well but, crucially, where your business is going wrong.  They can reveal patterns or trends, uncover potential trouble spots, monitor your business health and ultimately measure the progress of your goals.  This is vital information if you want to grow your business or if you want potential investors to invest in your business.

This, therefore, means that you should ensure you choose the correct KPIs that accurately track the goals of your business.

 

It can be a difficult task choosing the correct KPIs or even knowing what a good KPI entails.  When choosing your KPIs, you should consider the following:

 

Be Realistic & Measure It

The number one rule for creating KPIs is they should be realistic and measurable.  An investor looking at your business must be able to see the results of your KPIs or at least see the progress of them.

If they are unrealistic then it’s unlikely that they will invest as they will not believe the business has the capacity to reach these goals.  Its also essential that the information is portrayed in an easy to understand format.  This means that they should be in the form of percentages or rates; allowing the data to be read at a glance.

A KPI of “increase profits by 25%” is a lot more measurable than a KPI which is simply “increase profits”.  This then lets the business know exactly where they stand and what they need to do to achieve the percentage goal.

 

Action Is Important

While measuring KPIs is important, you should also ensure that they are able to be actioned.  If your KPI has no end goal, then it becomes a key performance metric – not a key performance indicator.

Your KPIs should provide you with the ability to make decisions and to see trends that give you the chance to adapt your strategy.

 

One Size Doesn’t Fit All

A good KPI will reflect your strategy and the goals you want to reach.  It goes without saying that different businesses will have different goals.  This will depend on the type of company (B2b companies will have varied KPIs from B2C companies) and the business model.

If your business is software, then your KPIs will differ from a business that is in agriculture.  Therefore, your KPIs have to be relevant to your business.

If you have a goal to increase your sales by 20% then your KPI would reflect this by looking at sales qualified leads, cost per acquisition or your marketing ROI.  Your KPIs can also reflect on departments or individuals within a team.  For example, a construction company may have KPIs that reflect number of incidents, number of working hours or timescales for completion.

 

How Can Software Help?

With any software, it removes the risk of human error.  Financial software is no different.

NetSuite can track these numbers and make the calculations automatically and can also generate reports which can be sent out to various employees within the business in an accurate and timely manner.  This, not only, removes the error factor but it eliminates the hours of manual labour trawling through spreadsheets and gathering data.  Meaning that you can focus on actioning the KPIs.

To grow your business, it is vital that your KPIs are clear, as well as being realistic and manageable.  If you don’t have these insights, then you are unable to track your progress.  If you don’t have these KPIs set up in your business, then it is crucial that this becomes a priority.  Not only is it important for investors to see, but it is important for your company’s health.  Pinpointing these KPIs will provide your with the knowledge of whether your company is financially sound or not.

Being a NetSuite partner, Cofficient can help you achieve these goals and support you with every step of the way.

Get in touch today and see how we can help.

 

Read our guide to 20 KPIs Every Growing Business Should Track