This may seem like a basic thing, but I am always amazed by the number of business owners who don’t know their own numbers. If you’re serious about what you do, and you want others to take you seriously as well, you need to know every financial detail about your business.
Not knowing some very basic metrics is the kind of thing that gets entrepreneurs laughed off the Shark Tank stage. Knowing your numbers is critical to you, too. Having a grasp on your company’s numbers will help you make just about any kind of decision.
You should take at least half a day, every month, to review your numbers and adjust accordingly.
Let’s start by taking a look at some very basic examples of Key Performance Indicators (KPIs). There are many more than this, but it’ll give you an idea of what we’re talking about.
A KPI is simply a performance measurement for your business. It’s a way of determining how well your business has done at meeting business objectives. The most important areas of your business where you will want to track KPIs include:
It’s important to select KPIs that are relevant to your business, and business growth. Some sales and marketing KPIs may include:
These are just a few examples, but there are many more that you can track.
Tracking the right KPIs gives you a powerful method for understanding historical trends within your business. For instance, reviewing monthly sales can let you know that March has been the best month of the year for the last three years straight. With this information you may be able to pinpoint the factors that led to this success. Maybe there was a Facebook promotion you’ve used in March that can be tweaked and used at other times of the year. Now you’ll have ideas to improve sales for the rest of the year.
When you go back and review these trends over long periods of time it can give you new insights you otherwise wouldn’t have.
When you use social media, email, blogging, and other marketing channels to generate new leads, it’s critical to track your progress. What marketing channels led to the most success last year? How can you capitalize on that success to generate more business next year?
These are basic questions. If you use Google Analytics for your business website, you can determine where your web traffic originates. You can find the most read blog posts, and so much more.
With this information you can optimize your marketing for more conversions. You can strengthen your brand and build a stronger relationship with your customers.
Everything that’s happening in your business is happening in the context of the world around you. Think about the current events, holidays, or trends that it may make sense to take advantage of as you market your business.
Having a key understanding of the numbers can help you grow and develop your business in more intentional, meaningful ways. When you understand what’s going on inside and outside of your business, you operate from a position of strength.