My tough love approach (heavy on the love) focuses on bringing order to chaos, and creating solid (and straightforward) strategic plans. I take surveys for fun, never met a process I didn’t like, and am a big believer in personal growth as a keystone to business growth.
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Key Performance Indicators (KPIs) are the numbers that tell you what’s happening in your business. You can rescue a failing launch, get ahead of staffing problems, and see what’s coming ahead of time. I'm here to help with the question: What KPIs should I track in my business?
Brought to you by Scale Society https://AnyOldTask.ca/Scale
The transcript is below if you would prefer to read this yourself instead of watching the video!
Hi and welcome back or welcome to Sidekick COO. I'm Sandra B, your Sidekick COO and today we are gonna be answering the question, what KPI’s (key performance indicators) should I be tracking in my business?
Alright, so first of all, the key performance indicators that you're gonna track in your business are gonna be dependent on a few things.
and all sorts of other things too but typically, a couple of things are going to be true for most businesses.
You're gonna wanna watch what's coming in and going outta your business knowing at the end of every week what you're expected to have in the bank. Knowing what your cash flow is and whether you're running cash flow negative or positive from week to week is going to help you manage your money much better than if you didn't have your eyes on that number. So that is one.
Specifically your profit margin actually. So a lot of people only look at their revenue, but what you really should be looking at is what your business is bringing in at the end of the day. At the end of the year, what is your profit margin? Understanding what your profit margin in is as a whole, but also on any specific offers that you might have. It's really good to understand if you have three different offers, which one has the most and which one has the least profit? And how do those things tie in together? It's fine to have something that has little to no profit or might even cost you money (it could be a loss leader) that drives other revenue into your business.
That's totally fine as long as you know about it. There's no sense of running ads to an offer that you think is making you money when in fact it's costing you money. You need to know your numbers around that. So always knowing what your profit margin is on any of your offers as well as your business as a whole, I'd say that's pretty standard for most businesses to understand and keep an eye on. Other than that, the key performance indicator that you're going to really wanna watch is”
So when I talk about like your main number, it’s the number that kind of like drives everything in your business, what is it that leads to revenue? What is it that when this number is affected, it affects everything in your business?
So for most people it's gonna be something like
Whatever that main number is, it usually starts with sales. If that number goes up or down, you know that your revenue is going up and down or your profit margin is going up and down or whatnot. It affects a lot of things in your business.
For instance, if you're tracking sales calls, maybe you have sales team and you're getting a heck of a lot more sales than you usually get. Maybe you have to hire more sales staff or if you get less sales calls booked, you have to have less sales staff. So not only is that affecting revenue, your top line, it's also affecting your expenses because as that grows, you have to bring in more people to accommodate more sales “potentially”.
So that's what I'm thinking about when I talk about your main number, your critical number, that one factor in your business that's kind of driving everything. Those are really the key things.
In regards to key performance indicators for everything else, again, it's gonna depend on what you are doing in your business. So going back to the idea of sales calls. If you have sales calls in your business, and maybe you're doing them all yourself, so say you don't even have a sales team right now, you're handling all your sales calls yourself, knowing
Then you can figure out from there, if I booked 10 sales and in the end three booked and I made a thousand dollars. Then I know that for every lead coming in, I'm making a hundred bucks or whatnot. And then I know that my conversion rate is 30%.
So that's just an example using really small numbers so that I could try and do the math in the head my head and hopefully I did the math properly. 🤔
The same with any projects that you have. A lot of people in the online space tend to put together courses or memberships or programs, things like that. So when you're putting that together just in regards to like say building the program. You might actually be looking at as a key performance indicator of that project, the amount of time it's taking to do compared to the budgeted or the estimated time.
I like to use a project management tool that lets me estimate my time and then also lets me track my time against all of my tasks so that I always know:
So if I am building a course, I can track my time and I can track my team's time and understand exactly how much that cost me. How much of their time went into it plus how much I paid them equals the cost of building that project on top of any other extra expenses for creating it. So it just helps me get, get a really accurate understanding of the cost of that project and then what, so that I can calculate my breakeven point.
Every time you're creating a new project, or you're doing anything new in your business, or even just your existing work in your business, you'll have key performance indicators for all of it. It's just a matter of thinking “what are the key performance indicators for this thing in my business” and “What do I need to know about this in order to make sure that it is running efficiently or being created efficiently” or whatnot?
You might have key performance indicators for customer service. So if you get a ton of customer service inquiries and you have a staff of three people that handle it, then you wanna know things like how long is it taking to answer each person. Or, what percentage of those inquiries are being handled on the first connection point? So that first interaction, what percentage of the customer service person's time is spent actually answering the customer versus documenting information for that customer versus idle time?
Lots of information that you can track. You should track a lot of information but then making decisions based on a few key areas. When you're trying to make decisions, you know, based on data, looking at too much data can really hinder your ability to make a decision.
Unless you really know how everything is connected, you're really just wanting to look at three to five really good metrics that will indicate where the project is or the success of the project or whatnot. That way, you can make decisions based on that information only.
When you are selling a course or doing a launch, you wanna know the conversion rate of your sales page, but you wanna know the conversion rate at each individual point of sale. A lot of people just look at the conversion rate overall. While that is an interesting metric to look at, if you are expecting to have say a 10% conversion overall and you have a 4% conversion overall you need to know where are you losing people along the way.
So is it that you're sending emails and people aren't clicking over to the sales page? In that case, you need to look at your emails. Or is it people are looking at the sales page but they're not clicking to the checkout? In which case, there's something on the sales page you probably need to look at. Or it could be a combination. There could be a disconnect between what you've said in the email versus what they're seeing on the sales page. So that's another thing to look at.
Are they going to the sales page, they're clicking to the checkout, but they're not actually completing the checkout? In this case, there could be a disconnect between the sales page and what they see at the checkout. Or there could be something on the checkout that's not working properly or something on the checkout that's just like putting them off.
And then, once you have all of those different conversion rates, you can then see, all right, so so this is where I need to fix this issue. So it's like one of the few times where you're probably gonna have more than one technically key performance indicator. Really the key performance indicator is the what's your conversion rate from email to to actual sale.
That's your key performance indicator. But then within that, the things that are gonna be informing that is your conversion rates for all those other points. So hopefully that makes sense. I will typically say you're only really gonna be looking at three to five metrics for anything, but when you're talking about sales and your sales have multiple kind of like points where somebody has to say yes to it, you kind of have to look at every single point in order to really figure out what's affecting your overall KPI.
So, just in regards to KPIs in general, what KPIs you track is going to be really dependent on what you're trying to accomplish and what you're doing in your business.
And this is something that we go into in-depth in Scale. Society, which is my group program designed to help move business owners from that owner-operator overwhelmed, doing it all themselves kind of role into the role of CEO where they are well supported and have the foundations in place that can help them scale their business more smoothly and more successfully.
If you're interested in Scale Society at all, make sure to get on the notify list by going to anyoldtask.ca/scale and beyond that, if you heard anything in this video that you thought ‘so and so' really needs to hear this, don't forget to share it with them.
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