You wake up in the morning determined to start a brand-new day. Your business requires your immediate attention in all areas: providing services or delivering goods to your existing customers, finding new customers, pay to suppliers, administrative work, developing new products… The moment you realise, it’s time to call it a day, have dinner, spend quality time with your loved ones. Then you go to sleep, wake up the next day and repeat the same routine all over again for long hours.

Time later, call it weeks, months or years, you notice the results you were expecting are not happening. It doesn’t matter how much you spend on advertising, working non stop for customers, acquiring better computer, whatever you do is not bring you the results you wanted.

Probably, you’ve also heard the saying. If something is not working, change the way you do it. Also you’ve probably heard that if you own a business, you must work even harder than when you were an employee. The bad news is that this last statement is usually true. The good news is that the first statement is also true.

Setting performance indicators

If I’m asking you, what is your monthly revenue, for sure you’ll have an answer for that. If I ask for instance, how many complaints you deal with every month, you’ll need to think a little more about it and, if I ask what is the average error you make when estimating the price of a service you need to provide, the question might even sound more bizarre.

Business is not only about hard work. It’s also important to establish a series of performance indicators that can be both financial and non financial, to get awareness of how your business is performing and help you make better decisions, whether to focus on one area in particular or/and stop doing what doesn’t provide any real value.

There is a broad range of these indicators available (you can even create new ones adapted to your type of business). What it is advisable is that you choose a combination of them, since they can provide you with a better insight. There are businesses and individuals that choose to focus only on one or two indicators, ignoring other important ones. Sooner or later, their business might fail, or they will not maximise their revenues.

To understand it better, it is like when you go to the doctor and she asks you for a blood analysis, measures your bone density, you lungs capacity, etc., to check your health and diagnose you with a potential illness. Performance indicators work in a similar way.

A really good example can be found on social networks, where most influencers focus only on the number of followers or likes. Then they decide to open a shop online and by their surprise, their sales are almost nil. Why does it happen? Simply, they ignore other indicators such as the engagement or interaction with their posts. In addition, companies with really high profits but with poor customer satisfaction can also put in danger the profitability of the company in the long term.

Be S. M. A. R. T. instead!

The main purpose of these performance indicators is not to distract you from your business, but to take a step back for a moment, look at them and ask yourself questions why things are not working the way they should and take corrective action (or leave things that are actually working).

Performance indicators (usually called Key Performance Indicators) are built after what a business considers what they should be their critical success factors. These must help achieve the main goal which is maximising profits (assuming this is yours well).

It is considered appropiate when a perfomance indicator meets the following criteria:

Specific

Measurable

Achievable

Relevant

Time-bound

Despite all characteristics are equally important, in my opinion, the relevant is the most important. The reason why is that an indicator must be relevant for your business and it’s crucial you bear this in mind when choosing the performance indicators. What works for an art conservator might not be the same for a lawyer, a florist, a tattoo artist or any other profession you might think of.

By setting them and reviewing them on a regular basis (daily, weekly, monthly, yearly…) you’ll be able to focus only on those areas that are relevant for your business towards its main goal.

Examples

A few examples, among the broad range that are available, can be:

Sales volumen

Returned items

Number of complaints

Articles published in relevant magazines

Number of followers in social media

Engagement in social media

Number of accounts reached through posts on social media

Even though in the beginning you might find it time consuming, over time you’ll reap the benefits. Further research and professionals of different areas might help identify and build the indicators that are the most relevant for you. Remember. It’s not only about working hard, but smart.

I hope you liked this article. If you have further questions or you require assistance, you can reach me through the contact form.