If we’ve learned one thing from our startup consulting clients, it’s this: your startup business can’t reach goals that it doesn’t set. Having vague goals usually leads to one of two things:
- An endlessly moving goalpost that you never seem to reach
- An inaccurate sense of how well you’re doing, so you end up settling for “good enough” rather than achieving your true potential
So how can you set clear, transparent goals for your company? By using Key Performance Indicators, or KPIs.
KPIs help you set goals and articulate them to others. After all, if you can’t communicate your goals to your employees, investors, or target audience, they won’t be able to help you achieve them.
What are key performance indicators?
Key performance indicators are a business’ best attempt at identifying tangible metrics that will paint a clear and accurate picture of the company’s long-term performance. KPIs are based around quantifiable goals, and can measure:
- Actual performance compared to target numbers
- Current performance compared to past performance
- Performance compared to others in the industry
Using key performance indicators is a vital part of any operations strategy, but they’re not an exact science. It’s critical that you regularly reevaluate your KPIs and adjust them as needed so your company stays on track.
Characteristics of KPIs
Before adding key performance indicators to your startup business plans, let’s take a quick look at important factors that make them successful.
KPIs must be tangible
One of the most important characteristics of KPIs is that they must be based around tangible goals.
For example, the goal of “more sales” isn’t quantifiable, so it’s not a KPI. But a simple tweak can turn it into a measurable KPI of “20% increase in sales meetings each year.”
Notice how “more” isn’t a tangible figure, whereas “20%” is? Tangible figures will be invaluable as you track long-term patterns in your business.
KPIs must focus on achieving your company’s vision
KPIs must connect to how your staff should operate within your business, and how your business should operate within your industry.
Using the example above, your thinking might run along the lines of, “A 20% increase in sales meetings will help us reach the revenue goals so we can invest in our first office. Then we’ll be able to meet with higher value clients and have space to grow our team.”
From the top down, each employee’s role needs to connect to the company’s operations strategy. Everything your team does must reflect back to the goals you’re trying to achieve.
KPIs must be long term
Key performance indicators are, by nature, meant to measure long-term goals that are “key” to your business’s success. If you can complete a KPI tomorrow, then it’s not a KPI.
For example, “increase new contracts by 10% each quarter” is a KPI, where “close the Smith deal by the end of the week” isn’t.
The number of new contracts your business is bringing in is very likely important to your overall business goals, but your business’ success is unlikely to hinge on the one Smith contract.
KPIs must be achievable
It’s important that KPIs are attainable; otherwise a sense of frustration may lead you down the path of giving up on your business dreams.
Effective KPIs are small ones that build upon each other. Think of taking baby steps towards your larger goals over time, leading your startup business to reach its potential.
KPIs must be constantly evaluated
It’s not helpful to keep changing your key performance indicators, but it’s crucial to evaluate them from time to time to make sure they’re doing what you intended.
Let’s take our previous example of “20% yearly increase in sales meetings” which seems like a good KPI, but what if it didn’t actually increase sales. When you dive deeper, you may find that your sales manager was pushing his / her team so hard for sales meetings, they were being set with friends and family who had no intent to purchase, in order to hit their numbers.
If a KPI isn’t helping your business reach its long-term goals, then it’s time to adjust or replace it. Remember, KPIs aren’t an exact science, so it’s normal for them to need a little adjustment here and there, especially for a brand new startup business.
How do I get started with key performance indicators?
So how can you add key performance indicators to your startup business plan? These steps will get you started.
Uncover your startup’s “why statement”
A successful startup business needs a “why statement,” which lets employees and the world-at-large know what your values are, and why you’re doing what you’re doing.
When everyone in the business knows the “why” behind what they are doing, motivation increases and teams can more easily focus on what’s important to the business’ success.
Take time to think about the metrics that truly define success
As we’ve mentioned, KPIs usually need to be adjusted as time goes on. But you’ll give yourself an amazing head start by taking the time to seriously think about what you’re working towards and what defines “success” for you.
The more clear you are on your idea of success, the easier it will be to define metrics that can measure your progress.
Develop a small KPI team
Developing a small team of trusted confidants within your business can help you validate your KPIs and provide essential oversight into how they’re performing. For the clearest picture, meet regularly (monthly, quarterly, or even annually) so you can quickly discern patterns and plan accordingly.
Work with Take the Stairs to develop your startup business plan
Not sure where to start with your current operations strategy or new startup business plan? Take the Stairs business consulting services can help you take that first step.
Our workshops and startup consulting services will get your company on track. Whether you’re just starting out or you’ve been struggling to get it just right, our startup consulting services and workshops can get your company on the road to success. We’ll help you:
- Develop KPIs
- Discover your “why” statement
- Formulate an effective operations strategy
- Construct or tweak your startup business plan
To find out more about how our business consulting services can help take your company to the next level, schedule a free, no-obligation discovery meeting today.