Businesses often ask us about KPI's and benchmarking and want to know more about them. So what exactly do these terms mean and how can using them help your business?
KPIs - Key Performance Indicators are pieces of measurable data that breakdown aspects of the operational side of your business in order to measure your progress. These include:
1. Data surrounding how many staff you have and how 'productive' they are in terms of selling goods or services
2. How many clients or customers you have and how much each of these spends with you
3. Data surrounding cashflow and the collection of bad debts or even debts you may have to 'write off'
4. Revenue generated by the different goods and services you offer
Benchmarking is vital when establishing the performance of your business. Benchmarking compares your important KPIs to those of businesses with similar operations. You can then ask yourself:
1. Are your operating costs as low as similar businesses?
2. Is your debtor management plan working as effectively as those of your competitors?
3. Is your staff productivity comparable?
Benchmarking can provide the not so obvious solutions to a number of small margins which in turn, when tweaked, may dramatically improve your bottom line.
Paul Martin Chartered Accountant Limited can assist you with setting KPIs and benchmarking your business. Contact Us to find out more.