What are the KPIs for Your Small Business?

15 minutes a day spent assessing the real-time metrics of your business will not only help you become more strategic, but ultimately more successful.

Microsoft Teams Image (15)

Every small business owner and startup alike are so entrenched in day-to-day activities that they’re mostly just reacting to one-off issues and challenges they face in every given workday. Each day is replete with the same urgency around putting out fires and multi-tasking. The investment in strategy is severely limited. That will change with embracing a technology platform. Doing so will provide you with a whole slew of insights and data, right at your fingertips.

This means that you’ll now have more time to look at your data in a very deliberate way: what’s working, and what’s not working. You’ll be able to discern what’s trending well and what’s not in your business so that you can make better-informed and more deliberate strategic decisions.

To start a business, it's important to establish key performance indicators (KPIs) and according to Bill Furlong, CEO and founder of SquareStack, a business plan can fail if it lacks strategy.

“Other folks call it business metrics, or your executive dashboard. However, it's important that small business owners understand some key data points of their business, probably mostly understand their cash flow, which all of us do,” Furlong says.

Some KPIs for small business are cash flow forecast, so how much money is in the bank as you start the week, or revenue growth rate if you have accounting software, can provide projections for you.

Read More: Appify Your Business: How-to-Guide in Leveraging Technology for Profit

7 Top KPIs for small business

  • Cash flow forecast
  • Gross profit margin as a percentage of sales
  • Funnel drop-off rate
  • Revenue growth rate
  • Inventory turnover
  • Accounts payable turnover
  • Relative market share

“Another thing is inventory turnover. This market segment, it may be all the materials that you have in the shop versus what you order and have to have just in time delivery,” Furlong says. “Another key metric, such as accounts payable, is pretty well understood and ritualized for the small business.”

Small business owners are motivated to start their own businesses for a variety of different reasons. As technology continues to provide deeper access to all the metrics of your business, it’s essential that you understand and utilize these new technologies to help you become more strategic about your business.

“Make a ritual -whether it's in the morning, or at the end of the day- taking a snapshot view of your business,” Furlong says. “I do it myself and it really just sets your day off on a great path. It helps you understand more strategically what your business is about, opposed to being on a treadmill every day, looking at the next 10 hours of work and not about the long-term view of your business.”

Here are four stages that I find balance the fine mix of strategic output with tactical execution that follows a strong vision.

Build Your Strategy

  • Turn your vision into a clear pragmatic statement. Keep it real in terms of achievable goals.
  • As your strategies take shape, ask for honest feedback from customers, employees, and vendors. Do you have a sense of your company’s value proposition? Do you need to improve the proposition?
  • Are you sitting around just waiting for change to happen, simply following your industry’s routine business model?

Translate Your Strategy into Your Daily Routine

  •  Are you passionately following through with tactics that will drive the strategy? Every day you and your team need to allocate energy to the new strategy. Communicate it so that everyone understands the critical mission at hand. Separately
  • Are you supporting the strategy with investment in infrastructure, and training to build these new services?

Execute the Strategy

  •  Are you motivating your team to support the new strategy? New incentives, and the ability to provide feedback will ensure buy-in.
  • Are you keeping track of the team’s performance? Your business apps in HR and internal collaboration will permit detailed performance measurement here.

Something as easily committable as 15 minutes a day spent assessing the real-time metrics of your business will not only help you become more strategic, but ultimately more successful.