Would you like to be able to predict the future of your business? Well, you could either find someone like this, or you can watch this week’s episode of “Mind Your Own Business.”
This week on “Mind Your Own Business,” we’re going to talk about KPIs or Key Performance Indicators and, specifically, how you can use them to predict the future or to anticipate problems in good time.
Now I don’t know about you, but I hate surprises. I want to know if bad news is coming as soon as possible because that way, I can do something about it.
So how do you do that? Well, the first thing you need to understand is the difference between Outcome KPIs and Activity KPIs. Outcome KPIs are those numbers that you cannot easily directly influence New customers would be an example of that Activity KPIs are those activities that affect the Outcome KPIs For example: leads in, or proposals sent, or conversion rate those are the activities that would affect the outcome of how many new customers you have, and in your business, you must understand outcomes and activities across all of the different functions in your business.
Essentially your business is an enormous sausage machine. Still, instead of generating meaty sausages, it generates cash sausages, and if you think about it, if you’ve got enquiries coming in, those enquiries need to be converted. Still, if your outcomes, so the number of enquiries is not precisely where it needs to be because some of the activities are giving you early warning signs, then you’ve got some time to do something about it.
Equally in sales: if loads of enquiries are coming in but some of the activity drivers and sales are just not quite right, then it stands to reason that you’re not going to be able to confirm enough new business and if you don’t get enough business in, then of course operations isn’t going to be able to do enough which means you’re not going to be able to invoice enough which means you’re not going to be able to get enough cash which means that your sausages are going to be little sausages instead of big, fat, juicy cash sausages.
So how do you use this in a practical way? Well, the first thing you need to do is, as I say – identify the key outcomes and the critical activity drivers for sales, marketing, operations, and finance; then what you need to do is you need to look at these numbers on a weekly basis and that way you’ll be able to pick up problems in good time.
You don’t need to wait until the end of the month to find out that you’ve had a bad month; you’ll be able to spot on week one of a four week month that you are off track, and if you know that you’re off track on your activities there’s still some time to do something about it before the week’s even over, and that’s how you predict the future In business, time is crucial the more time you have then, the more solutions you have at your disposal to fix problems.
So I hope you found that useful; if you did, please like and share, and I will see you next week on “Mind Your Own Business.”
If you’re looking for more new business advice, then we’d like to see you every week on “Mind Your Own Business,”
Marco Soares is an award-winning business coach in Sussex and is available if you’d like help implementing any of the tactics mentioned in “Mind Your Own Business”