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KPI examples for small business: 5 KPIs you should be watching closely every week
We live in a world that’s “busy” and most of us probably have more on our “to-do” lists than is healthy.
That tends to cloud some of the most important aspects of running a small business – like what we should be measuring and monitoring in the business.
Deciding on your small business KPIs is essential – but how do you know which ones are the most important?
The balance we need to find in a small business
If we leave our own business to last and focus all energies on our clients, our business is neglected.
Conversely, we can’t focus all our time and attention on the business or our all-important clients will be neglected; or we will reduce our productive working hours.
So, what’s the balance?
How do we find the “sweet spot” so our business is humming without tying up endless hours in administration?
This is where your small business KPIs come in.
These are the crucial areas of the business that need our attention, with effective systems set up to capture the information needed and adequate time scheduled to monitor and address the key areas.
Five KPI examples to track weekly in your small business
We suggest focusing on these five important KPIs:
Let’s start with the big one. Cash is king. There are plenty of profitable businesses that have failed due to poor cash flow management.
So, here are a few pointers:
- Each week, know what money is coming in and going out of the door.
- Chase outstanding debtors. Train your customers to pay you on time or, better still, consider a direct debit arrangement.
- Put money aside into a different account to cover statutory obligations such as GST, tax, and super.
- Ensure your business has enough working capital or reserves to cover lumpy overheads or seasonal periods where income is lower.
- Consider monthly payments for things like insurance to help smooth out your cashflow.
- Work with your accountant or advisor to set monthly dividends and then treat them as an expense of the business that must be met out of your regular cashflow.
This is equally as important as cash flow.
Have you completed the work that allows you to bill the client?
If so, get the invoices done and out. The quicker that they’re out the quicker they’re due!
Having good electronic systems and procedures throughout your business will help to make your business more efficient.
If you can get a typical job completed in three weeks rather than four (because of enhanced efficiency measures), you will increase your capacity by 25 percent over the same, or similar, base of overheads.
That is a sure-fire way to boost productivity and profits.
While wrapping up this week’s invoices, plan how next week’s work will be completed.
3. Your clients
How often do you touch base with your clients and referral network? Are you actively nurturing them?
- Make sure that you’re in regular contact: arrange a coffee to discuss and debrief the latest job that you’ve completed for them.
- Provide examples of solutions you’ve delivered to other clients that might be useful to them.
- Get to know them on a personal level – what drives them? What keeps them up at night?
- Find out what opportunities they see for their business or their industry that you could help to deliver.
4. Your resources
Your staff, subcontractors, suppliers, and network are vital to your ability to produce quality output in an efficient manner.
- Make sure your staff feel valued – touch base with them weekly on how jobs are progressing.
- Empower employees to do their job well.
- Take time to sit down with key staff regularly and talk about their career and ambitions.
- Pay subcontractors and suppliers on time. They will be much more likely to deliver if you need to call in a favour, such as a quick delivery, more generous payment terms, or a service out of their normal scope.
As boring as this sounds, having a reliable system to know when the regular compliance or administration tasks required for your business are due is invaluable.
A simple electronic diary, accessible to your team, is a great starting point to schedule things such as:
- Due dates for annual insurance renewals, car registration, etc.
- Industry body renewals or applications.
- Test and tag due dates.
- Monthly debtors’ statements to be produced and sent out.
- Tax compliance deadlines such as STP, BAS, FBT, super and end of year tax payments.
- Monthly P&L review – budget to actual.
- Regular conversations with your accountant or advisor.
- Training days for you or your key staff to increase skills and offerings.
Of course, this list of KPI examples could go on but the most important point is to tailor the essential KPIs to you and your business.
With constant development, your KPIs will evolve, systems will be honed, efficiency and productivity will grow, and your business profits will increase.
Not sure where to start?
Schedule a time to talk to us and we’ll set you on the right path to success.