We have concluded our journey through the KPIs, KRIs, and PIs that we use in the 8 key areas of my businesses. But with so much information to digest, I thought it would be helpful to take a look back as we wrap this series. Across my three companies, we have around 100 indicators that we track on a regular basis. Although that might seem like a lot, there are many businesses that are tracking up to 300 performance indicators. So, let’s take one last look at how you can improve your business with KPIs.
Follow Along With The Financially Simple Podcast!
When I began this journey, I thought I’d have my companies’ KPIs identified within 45 days. However, identifying the KPIs, KRIs, and PIs in my businesses proved to be much more challenging than I anticipated. That’s why I decided to create this series. I wanted to share my experience in the hopes that you can learn from the lessons and challenges that I faced.
Famous business consultant, Peter Drucker, once said, “What gets measured, gets improved.” As business owners, we have goals. We have so many ambitions and aspirations for our businesses, and yet, we often don’t have a plan to attain them. According to Watts Humphrey, “Unplanned process improvement is wishful thinking.” You see, we can’t improve our businesses without measuring what is taking place within them. Likewise, those measurements are useless if we don’t have a plan of action to improve the processes and data points that they are measuring.
Henry Ford has been credited with saying, “If you always do what you’ve always done, you’ll always get what you’ve always got.” I love the straightforward message that this conveys. Identifying, strengthening, and condensing the KPIs in your business is not an easy task. But if you just continue doing what you’ve always done, your business will always yield the same results. Maybe that’s not a bad thing, in your individual situation. But regardless of how well your business is doing, you should always seek to make it better. So, if you can improve your business with KPIs, how do you identify and implement performance indicators in your business?
Recently, my daughter introduced us to the game, 20 questions. Several times a week, we will play this game while we are sitting around the dinner table. If you’re not familiar with it, it’s pretty simple. Basically, one person thinks of something (we typically use movies), and the others have to guess what it is by asking a series of questions. If you guess before you’ve used up your 20 questions, you win. If not, the person answering the questions wins.
I actually won this game not too long ago. The movie that I thought of was the Disney classic, Alice in Wonderland. Although this is a game that I won by thinking of a children’s movie, I believe that this could be useful when determining how to improve your business with KPIs. I know. Right now, you’re probably thinking, “Justin, how on earth am I supposed to identify and implement the performance indicators that I need to track, based on a game of 20 questions and Alice in Wonderland?” Bear with me, because I’m going to clear this up for you.
First, you must think differently. As you go through the process of identifying and implementing your performance indicators, you’re already beginning to think differently. At one point, in the film, Alice says, “I can’t go back to yesterday because I was a different person then.” This statement applies to you as well, if you’ve followed along with this series.
RELATED READING: Business KPIs – How We Determined Ours
You see, now that you know how we identified the KPIs in my three companies — how they work, why we track them, and how we implemented them — you can’t go back. You were a different person before. Now that you understand that indicators lead business owners to be able to double their net worth every 3 – 5 years, you’re a different person. So, you’re thinking differently than you were before and you can’t go back. Thinking differently is crucial if you plan to improve your business with KPIs.
Where do you see your business in the next 3 – 5 years? Do you know what it will look like? How many employees will you have? What type of revenues are you forecasting? What does your role in the company look like? These are just some of the questions you should be answering in order to define exactly where you want to be. According to the Cheshire Cat, “If you don’t know where you are going, then it doesn’t matter which path you take.”
However, the path you take in your business matters. You must have a clear destination. Knowing where you want your business to be, enables you to identify which points you’ll need to measure. This is why it’s so important to have a plan. If you don’t have a plan, you’re flying by the seat of your pants and it doesn’t matter which path you take because you don’t know where you’re going.
This is where the 8 key areas of your business come into play. Alice woke up and told the king, “I am not where I was yesterday.” She knew that something changed. So, let’s look at the 8 key areas in your business to assess what needs the most attention. Have you ever done any planning? Do you have a written business plan? Is there a strategic plan in place? If not, you should consider remedying that.
The same goes for your business’ leadership. I actually have a client that began working with us about 2 years ago. Their primary goal was to get to a place where they no longer had to be involved in the day-to-day operations. Now, because of COVID-19, this took us a little longer than it ordinarily would. However, together, we were able to replace their entire organizational structure. Because they now have a team in place that they can trust, they almost never look at the daily operations.
So, let’s assess your current situation. Do you have a plan? Is leadership an issue? Do you need to devise a marketing plan? Is there a sales process in place? How are your people? Your financials? Are the operational structures of your business efficient? What types of risk are you and your business exposed to? If you assess these areas, you can figure out which one needs the most attention. My latest book, Your Baby’s Ugly, explores this in great detail.
“It sounded an excellent plan, no doubt, and very simply and neatly arranged; the only difficulty was, that she had not the smallest idea how to set about it.” — Alice in Wonderland.
Now that you’ve assessed your current situation, devise an action plan to implement 5 indicators for the weakest areas of your business. You need to determine whether you need KPIs, KRIs, or PIs, and what you’re going to do to put them in place. Maybe you’re looking at your business and saying, “Justin, my marketing is really weak. I don’t know how to market my company.” This is where a consultant can help you.
I pay consultants to help me in my own business. If I, being a professional consultant and advisor, hire consultants to help me in my business, that should tell you just how important it is to have that outside presence in your own business. Friends, the greatest professional athletes in the world still benefit from having a coach to guide them. If you need help in this area, reach out to us.
“If everybody minded their own business,” the Duchess said, in a hoarse growl, “the world would go round a deal faster than it does.” — The Duchess.
There’s a problem with this statement. In business, you’ve got to have the team minding your business. To improve your business with KPIs, you need to have everybody on board. Tracking each indicator takes a team effort. So, you must take the time to explain the changes to your team. If they know the goal, they’re able to participate in a productive manner. With the right team, tracking indicators across the 8 key areas, you can learn new things about your business every time you meet. Even better, as the team begins to track the indicators in their individual areas, they will actually grow closer to achieving their individual goals (as they pertain to the business), as well.
“Every adventure starts with a first step.” — Cheshire Cat.
Let me reiterate, this is not easy. Identifying and implementing the indicators that empower you to improve your business is a long and difficult process. There’s a reason so many business owners hire third-party consultants and business coaches to do this for them. However, it is a rewarding endeavor. In order to reach that reward, you must take the first step.
Now, if you’re thinking of all of the reasons that you can’t do this, don’t stand in your own way. I get it. You have a million other things on your plate. Maybe you’re saying, “I just don’t have the time,” or, “I don’t have the right team.” You might even be thinking, “Justin, this is impossible.” To each of those, I will respond in the same way that the Mad Hatter replied to Alice when she said things were impossible. “Only if you believe it is.”
Scripture says, “Whatever a man thinks in his heart, so is he,” (Proverbs 23:7). The journey to improve your business with KPIs is a difficult one but it is not impossible. My challenge to you is this… improve your business. In order to improve your business, you have to measure. If you don’t have a plan, it’s just wishful thinking. You must have a plan to improve the areas that you’re measuring. Take what my team and I have poured into this series, and implement it into your business.
Friends, life is hard but it’s good. The journey to improve your business with KPIs can be frustrating, but it doesn’t have to be. By following some of the wisdom imparted through Alice and her Wonderland friends, you can make identifying and implementing your business’ KPIs, at least, financially simple.
If you feel that you would be better served by having help from professionals who have walked through the identification and implementation process many times, reach out to us. We do this on a daily basis and the team at Financially Simple is here to help you and your business along its KPI journey.