Choosing the Right KPIs to Drive Success in Your Business

by MHolland | Oct 30, 2024 | Business Tips, Selling Tips, Systems

A family business is more than a company. It is legacy, values, and generations of demanding work. It is unique. And just like every family is different, every family business has its own way to define success. So how do you know if you are on the right path?

Key Performance Indicators (KPIs) can help. KPIs keep your business on track. They are like the dashboard in an aircraft. Without KPIs you are flying your business blind.

Why KPIs Matter

KPIs are your business’s health check. They are the numbers that tell you if you are thriving or just getting by. They give you focus. They drive decisions. Think of KPIs as the vital signs of your business. With the right KPIs, you will know where you are winning and where you need to improve. Every business and organization needs this insight.

Step One – Align KPIs with Goals

It starts with a simple question – what is your 3-year Vision? Where do you want to go?

For some, it is growth – it is increasing revenue.

For others, it is improving efficiency or customer loyalty.

Your KPIs should match these goals. No random metrics. If your goal is growth, measure revenue or profit margins. If your goal is customer loyalty, look at repeat sales or retention rates.

Every KPI should connect back to what matters most. This keeps you focused and cuts out distractions.

Step Two – Make KPIs Measurable and Clear

Numbers matter. The best KPIs are specific and measurable. Think percentages, timeframes, or raw numbers. For example – “Increase monthly revenue by 15%” or “Reduce customer complaints by 25%.”

These are clear. They are easy to track and easy to understand. Avoid vague goals like “Improve customer service” without any numbers. Specifics matter. The clearer the KPI, the easier it is to measure it.

Step Three – Get a Good Mix of KPIs

KPIs should be balanced. A good mix looks at the big picture.

Financial KPIs like net profit or gross margin are crucial. But they are not the only numbers that matter.

Customer satisfaction, employee turnover, and process efficiency matter too. Each tells a part of the story. Financial metrics show profit and cash flow. Customer metrics show loyalty. Employee metrics show team stability and morale. Together, these KPIs give a full view of your business’s health.

Step Four – Keep KPIs Realistic

Ambition is great but keep KPIs achievable. Aiming for the stars is fine, but do not let it become unrealistic. Unrealistic KPIs can lead to burnout, disappointment, and poor decision-making.

Think about why you are in business in the first place. Most people go into business for freedom. No one wants to be a slave to your business. Do you?

Start with reachable goals and increase gradually. If you are tracking profit margin, aim for a 5% increase this year, not 50%. Realistic KPIs keep your team motivated and moving forward. Small, steady wins add up.

Step Five – Review and Adapt KPIs Regularly

KPIs are not set in stone. As your business evolves, so should your KPIs. Review them regularly. Every quarter or every year, check if they are still relevant.

Has a goal changed? Adjust the KPI.

Has the market shifted? Update it. Adaptable KPIs keep you responsive to change. Your business is dynamic—your KPIs should be, too.

KPI Ideas for Family Businesses

Need ideas for KPIs? Here are a few to consider:

1. Gross Profit Margin – Shows your profitability after direct cost of sales.
2. Customer Retention Rate – Loyal customers are your backbone. Track them.
3. Operating Cash Flow – Essential for understanding your cash movement.
4. Employee Satisfaction – High satisfaction often means lower turnover.
5. Sales Growth Rate – Tracks how fast your revenue is growing.
6. Inventory Turnover – Ideal for businesses with physical goods. Shows how often stock is sold and replaced.
7. Debt-to-Equity Ratio: A key financial health metric. Lower ratios indicate stability.

Each KPI tells a piece of the story. Together, they give you a roadmap for success. They show you what is working and what is not. They keep you accountable. And they keep you moving toward your goals.

In Conclusion

KPIs are a tool—a powerful one. They are not just numbers; they are a compass.

With the right KPIs, you have a way to measure success. You have a way to stay focused. And, most importantly, you have a way to ensure your business thrives for years to come. So, choose wisely, measure consistently, and watch your hard work pay off.

Thanks for reading…

Happiness-Based Business, Freedom App, and Other News

by MHolland | Aug 30, 2024 | Business Tips, Selling Tips, Systems

The end never justifies the means.

The means are the end.

How you do one thing is how you do everything.

These are the simple secrets to a happy business.

I see businesspeople claim to endorse awesome service. They talk nice to strategic partners and customers.

Then they turn around and talk trash to their Team and suppliers.

No, if you want a happy business, you need to give happiness away in everything you do.

Here is the secret – it does not start with your customers.

That may be your end point – happy customers who refer and keep coming back.

Remember? The means are the end. The end does not justify the means.

Start with your family. Treat them like the diamonds in the rough that they are.

What? Your family? What the heck has that got to do with business?

Everything.

See the other cliché above – how you do one thing is how you do everything.

If that is too much to bear, start with your Team. They are the ones who are your real clients/customers.

They are serving your customers.

How you treat them is how they will treat your customers.

Money follows happiness.

A happy culture attracts customers. And they want an experience, not only a great product/service.

And because you are happy you discover that the means and the end are one. Because you are being happy before the end goal happens.

A colleague of mine, Ryan Lazanis has this to say about creating a successful business:

“I asked my LinkedIn network to fill in this blank last week:

The key to a great firm is _____.

I received dozens of answers:

• Streamlined processes.
• Standardized systems
• People
• Vision
• Checklists
• Communication
• Leadership
• Etc.

Want my answer?

Here it is:

Happy people.

This is the key to any great business.

We want the team to be happy (including you).

And we want your customers to be happy.

You cannot run a great business without this.

And “happy people” is the culmination of most of the things that my connections chimed in about.

Optimize the business for “happy people” and there is no way you can have a bad business.”

And now for my next topic…

Are News Feeds a Distraction, Or Worse An Addiction?

When you take a work-chill break do you scan through the news?

I admit I do. Until now.

Do you know what though? Before the Internet I used to read books voraciously. Classic books like the lives of Saints (Confessions of Saint Augustine, Saint John of the Cross, Dickens, Lord of the Rings).

Now most of my many Kindle books are about 10-15% read. I wonder why?

Could it be my attention span is lower now?

Possibly. I do have a laser focus at work, yet I am going back to having chill breaks by reading my Kindle.

Check out this Blog about news feed as an addiction.

Should Your Business Create a Niche?

Yes.

Create a niche and get rich, if not, life is a b^&%h.

Sorry, I am full of clever cliches today.

Too many businesspeople suffer from shiny object syndrome. They think the more they offer the more sales they can get.

Problem is that the more you offer the more problems you have, the more you lose your focus.

Okay, and here is my last cliché for the day. I promise.

He who is a jack of all trades is the master of none.

Here is a remarkably interesting fact for those of you thinking of taking the dive into creating a niche in your industry.

General Motors sells about 6.2 million cars per annum.

Ferrari sells about 13,200 cars per annum.

GM is valued at $55.3 billion.

Ferrari is valued at $88.45 billion.

I rest my case.

Thank you for reading…