Limited Company: Maximising Performance & Productivity
Running a small business can be all-consuming and it's easy to keep going rather than pause and look at how you're actually doing.
Taking time to regularly look at how your business is performing can help to identify what is working and also what needs to be changed. Identifying and implementing Key Performance Indicators (KPIS) that are reviewed regularly can help measure performance as well as to set targets for improvement.
KEY PERFORMANCE INDICATORS
KPIs are measurable values that can provide clarity and control in the early days of a new business as well as targets for improvement in more established companies. They offer a framework for setting goals and understanding how a business is performing. They can also help you to break down bigger goals into manageable chunks.
KEEP IT SIMPLE & ACHIEVABLE
You’re most likely to succeed by selecting a small number of manageable KPIs that will help you to work towards your goals each day and lead to big improvements over the course of a year. Choose KPIs, by thinking about one to three things that you look at daily, weekly and monthly then break down your targets into achievable actions. There will most likely be numerous actions for each goal which you could work through one per day over the course of several months.
KPI: Average customer spend
Goal: Achieve an average customer spend of £100 within 6 months.
Action: Adjust website messages to encourage customers to buy multiple products.
KPI: Website traffic
Goal: Increase site traffic by 25% in the next 6 months.
Action: Review ways to increase traffic to the website and select the best way forward within an agreed budget.
KPI: Profit Margin
Goal: Achieve a gross profit margin of 30% within 1 year.
Action 1: Review costs to highlight areas for savings.
Action 2: Review product pricing and margins (including shipping charges) to identify where margins are too low and costs and pricing may need to be altered.
For example, in trying to increase profit margins, an online retailer might look to reduce their cost of sales and review each supplier they use to see where savings could be made. Equally, they might seek to improve margins through reviewing their pricing, while bearing in mind that increased prices may deter customers from buying if it becomes uncompetitive or perceived as being poor value. Reviewing cost of sales could seem like a huge task in some businesses. To make this achievable, it can be done by reviewing one supplier a day over the course of several weeks or months.
IT"S NOT JUST ABOUT MONEY
KPIs are a great way to ensure that your business is performing in line with your expectations and ahead of the competition.
However, when reviewing your performance you often need to consider not just your financial results but also how the business is working for you and the team in terms of time and energy. If you're profitable but exhausted and rarely have time for life away from the business, something most likely needs to change. It may be useful to review how the business could be run more efficiently and effectively and perhaps what tasks could be delegated without an impact on performance. You could even implement KPIS around this to start meaningful conversation about how you can have it all: a successful business, a rounded life and a happy workforce...
Finally, make sure your KPIs are interesting and engaging for yourself and your team and feel free to get in touch if you need help you with your KPI management, goals and actions.