KPIs for Fast Growing Businesses and How to Measure Them

What are KPIs?

Monitoring your business’ health and performance is a necessary process that aids leaders across the business to make operational, tactical and strategic decisions. However, without the necessary or relevant data available to the decision maker, it’s easy to make the wrong decision. Key Performance Indicators (KPIs) are quantifiable metrics which measure a company’s performance against its primary business objectives and should, if chosen correctly, provide the information needed to make the best-informed decisions to meet short and long-term business goals.

 

Why are KPIs so important though? Here are six reasons your company should have some:

  • They monitor company health by providing data from a variety of departments such as financial, operational and customer-based metrics.
  • It’s easier to measure progress if you have KPIs aligned to your targets.
  • You may then realise that your targets are unrealistic or no longer matter, and therefore need to adjust your goals and targets.
  • Analysing KPIs can help you identify problems or inefficiencies which you may never have noticed.
  • They also simplify trend spotting when measured over a longer timeframe, which can benefit future decision-making.

 

How do we Ensure KPIs are Effective?

As much as we’ve established the importance of KPIs, they’re only ‘key’ if they’re measuring something which aligns with your company’s goals – otherwise, they are just metrics.

 

KPIs are used both at a high-level, to measure overall performance, and lower levels, to measure departmental performance. Furthermore, while there are KPIs which aren’t industry specific – such as gross profit margin or cost per unit – they should be completely relevant to your company’s particular goals. For example, a manufacturing company isn’t going to have the same KPIs as a hospital – however, they’re not likely to even have the same KPIs as a competing manufacturing company, as their business goals will probably differ. That’s why it’s essential to choose KPIs relevant to your own strategic goals, as they’re there to help you achieve them. Also, generally, we’d recommend limiting your KPIs around ten. While they combine to create an up-to-date picture of how your company is doing, too many can just complicate things and divert focus from the key issues.

 

Your company’s life cycle has an impact on what KPIs you’ll focus on – a growing business, for example, is more likely to focus on customer feedback or business model validation than monthly recurring revenue or customer retention, which is more appropriate for a mature business.

 

You may have heard of ‘SMART’ KPIs – this refers to KPIs being Specific, Measurable, Attainable, Relevant, and Time-bound. An example of this is to increase operational cash flow by 20% by FY2022. As you’ll be referring to the KPI to make decisions, you’ll need to ensure that it’s easy to measure and quantifiable, which is why they’re typically conveyed as ratios, percentages or rates, as these give you a real idea of performance. The targets aligned with your KPIs should be realistic and attainable as the KPI will then be easier to manage, but if it turns out that they are not, then they can be tweaked based on the information that your KPI is providing. Ultimately, your KPI must be able to assist you and your team to make the correct decisions which will help business success.

 

How can financial software help with KPIs?

Using manual methods or spreadsheets can make tracking even the most basic metrics like revenue cumbersome. As transaction volume increases, especially in fast growing companies, it is near impossible to keep all the relevant data up to date. It also leaves room for errors and inaccurate information, developing a host of problems that make analysing your KPIs challenging. However, leading financial software or enterprise resource planning (ERP) systems such as Oracle NetSuite can provide you with the tools to view any KPIs you may wish to track on your dashboard with real time data.

 

 

NetSuite enables you to easily customize role-based dashboards to monitor the KPIs that are important to both your business overall and to each member of your team. It then automatically displays accurate, real-time data for your financial KPIs. This enhances your team’s productivity as they spend less time coming up with the data and more time acting on it. Comparably, its inventory management and order management functionality also allow for your operational metrics to be tracked.

 

This NetSuite whitepaper ‘Make or Break Metrics – 20 KPIs Every Growing Business Should Track’ provides detailed information on the most popular KPIs and how the right software empowers them.

 

ERP systems such as NetSuite provide a full 360-degree view of your company which empowers you to meet KPIs. Fast growing businesses in particular benefit from real time data as it provides the clarity needed to demonstrate the direction that their business is going. NetSuite delivers the capability to constantly track KPIs and make better-informed decisions so that your company continues to grow.

 

Eureka Solutions is a 5-star NetSuite Partner and was named Outstanding NetSuite Partner of the Year for the UK and Ireland earlier this year. They are also a leading Sage 200 Partner with one of the most technically proficient business solutions teams in the country, so are ideally placed to talk through your challenges with real examples – contact Richard Christie, Business Systems Specialist, on 01355 581960 or richard.christie@eurekasolutions.co.uk.