At some stage as a business owner, an employee or as a student, you will have come across the term ‘Key Performance Indicators’ (or KPI’s for short).
The definition of a KPI is “a measurable value that demonstrates how effectively a business is achieving key business objectives”.
It’s a quick and easy way to see how the business is performing against the strategic plan and industry benchmark.
[Book your free business KPI-setting consultation here]
Furthermore, KPIs can be both financial and non-financial. No two businesses are the same, so the KPIs will always be geared towards your business (and goals).
How do they help you as a business owner?
Let’s start with a list of different types of KPIs:
- Debtor days – an average of how long it takes for debtors to pay you
- Payable days – an average of how long it takes for you to pay your bills
- Gross Profit Margin – the margin that you make on each sale after costs to produce
- Break-even point – the point at which costs and revenue are equal
- Wages & on-costs as a percentage of sales – the percentage of wages that contribute to sales
- Occupancy rates – the rate of rooms booked vs total rooms
- Conversion rates – the number of proposals accepted vs total proposals prepared
- Average sale – what is the average sale of the business
[Related reading: How compliance can transform your business]