Use Key Performance Indicators to Run Your Business the Easy Way

Make your life easier by creating a one-page business plan that identifies the essential activities in each section of your company, so you can tell at a glance how well you are doing and what needs attention.

The one-page business plan from Verne Harnish enables you to do this effectively by leveraging key performance indicators (KPIs) to guide your actions. You can also get software that records your business plan, KPIs, and performance metrics while also providing you with a dashboard that shows you your progress at a glance.

Developing a One-Page Business Plan

A one-page strategic business plan is a document (paper or electronic) that outlines your organization’s goals and objectives and the broad strokes you’ll take to achieve them. The concept was supported by entrepreneur Verne Harnish and popularized in his book “Scaling Up.” The idea is to condense all your important strategic information into one high-level document that includes:

• Vision statements and strategic objectives of your business,
• Customer segments your business serves,
• Overview of the product or service you provide,
• Sales goals and marketing strategy, and
• High-level business overview of your financial projections.

The success of this exercise begins with accurately identifying the business’s top KPIs and including them in a workable strategy that guides your team’s actions in the right direction. If you use a software program to develop your plan, the program will guide you through certain steps.

Identify Your KPIs

First, define your primary goal for the business over the period you’re planning, and then choose your KPIs. These are the numbers you need to reach for your business plan to succeed. For example, if one of your goals is to get $500,000 in sales revenue for the year, then breaking it down into monthly chunks gives you a monthly KPI of $41,600.

By calculating your average value per transaction, you can set KPIs such as a minimum number of monthly transactions and the number of sales calls or presentations it typically takes to achieve them. In this fashion, KPIs can help guide your team to concentrate on what’s important and avoid getting sidetracked.

Set Measurement Criteria

It might sound obvious, but you’ll only know if you’re reaching your revenue goal if you’re tracking your sales, right? If one of your KPIs is to achieve $41,600 in sales each month and your February results are only $38,000, you’re not on track unless you make it up in another month.

Viewing all your KPIs and the results regularly will help you understand the health of your business, make critical adjustments to close any gaps, and achieve the results you want.

Without measurable KPIs that you review frequently, it’s easy for your business to veer off the rails. Your revenue figures are probably closely tied to costs like payroll, advertising budget, and capital expenditure. If you don’t know how well you’re performing against your targets, by the time you realize it’s necessary to cut your advertising budget, you could be experiencing a financial loss.

Get Employees Involved

Just as you can’t operate your business alone, you can’t achieve the results you want without involving your employees. Get their buy-in to your one-page strategic plan by sharing it with them. Identify the KPIs that apply to each staff role and motivate or incentivize the team to work towards achieving the results.

For example, if one of your goals is customer retention, create a KPI for generating recurring revenue from existing customers. Research shows that increasing customer retention by just 5 percent can boost your profits by 25 percent to a whopping 95 percent, and besides, it’s cheaper than constantly looking for new clients. Some of the ways you can get employees engaged in supporting your KPIs include:

1.    Explain the logic. When employees think you’ve set new targets and goals on a whim or simply to drive profits, they see them just as numbers to hit. This can result in actions like going to unqualified meetings or making pointless phone calls just to push up their figures for the month.

2.  Provide supports. Few things are as demotivating as being given new targets without increased support. Once your team understands their KPIs and why they matter, it’s time to focus on how they can achieve them. Work with your key staff individually to map out:

1.    How the company KPIs translate to their own roles and responsibilities,

2.  Three key things they need to do to achieve their personal KPIs, and

3.  Primary actions that will help them to do so, and what support they need to perform the tasks.

3.  Break it down. When each staff person understands their main focus areas, encourage them to identify one daily task for each area that will have the most impact on achieving the goal. For example, perhaps a salesperson needs to make X calls a day to prospective clients, secure Y number of appointments, and make Z presentations to reach their monthly call, appointment, and presentation goals.

It's essential to make it worthwhile for your team to embrace and take ownership of your plan and the KPIs. Working harder and smarter for the same reward doesn’t motivate anyone. Incentivize your staff by offering attractive (and attainable) benefits for achieving and surpassing their goals. These don’t necessarily have to be financial, either. Sometimes the offer of time off, a company perk, or a potential promotion can be more meaningful than simply offering higher compensation.

Taking a Leap

When you create a strategic business plan featuring KPIs and performance measurements, you’re taking a leap towards greater business success. Running your company will be less challenging when your team is motivated, and each member works towards achieving their own goals.

Having a clear, unambiguous plan that enables you to compare your performance at any given time (via a management dashboard or on paper) allows you to change tactics without delay and stay ahead of the curve.

Shouldn’t We Talk?

Want to explore further? Questions? Get in touch and let's set up a time to talk. Jeff Nelson +1-612-719-4722 Email Me