Back in Q1 of 2021, my team and I completed a strategic planning session. From this session, came the podcast and blog series that we’ve just concluded. Over the past 10 to 12 entries, I’ve discussed my businesses’ KPI journey. As a result, we have received a massive influx of emails from you, wanting to know more about identifying and implementing KPIs. In fact, I think we’ve gotten more of a response on this topic than any other that we’ve ever covered. So, today’s entry is all about how to simplify your life through KPI application.
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When I was a teenager, I severely injured my knee. I’ve had a lengthy surgery to repair the damage. At one point, I even had artificial parts and a cadaver placed in my knee. Because of this, I’ve often joked that one leg is faster than the other, or that I can jump higher with one leg than I can with the other. But before any of these surgeries were able to take place, the doctor had to see what was going on inside my knee.
In order to get an internal image, my doctor ordered an MRI. If you’ve ever had an MRI, you know that they are very loud and uncomfortable. However, they are necessary to reveal the soft tissue beneath the surface. This is similar to the KPI application. Discovering the KPIs that give you an accurate picture of your business can be a long and uncomfortable process but it’s a necessary one for its overall health.
Just as the doctor was able to read the results of the MRI to discover exactly what needed to be repaired, the KPIs in your business can show you what’s in good shape and what needs immediate attention. Although there are hundreds—if not thousands—of tests that the doctor could have run, they would have taken too much time and money to conduct. Instead, he knew that he could look at this one test and see all that he needed to see. This is also true in your business. You could look at hundreds of indicators but there are a few that will show you all you need to know about your business.
I have a client that regularly listens to the Financially Simple Podcast. Not only does he listen to it, but he also has his team listen to the show, each week. Following the wrap-up of the KPI series, he called me up and said, “Justin, we’re ready to identify and implement our KPIs. Let’s do that on our next call.” I had to chuckle to myself because I admired his eagerness and tenacity, but I knew what he was suggesting wasn’t really possible. You see, there are a few points that you must consider.
Now that I’ve given you a few things to consider before embarking on your own KPI journey, let’s look at some of the things that helped me along the way. These are just a few questions to ask yourself as you go through the process. They are intended to steer your thinking toward the desired end result.
The first thing to ask yourself is, “What do I have to do to have a successful business?” However, you must ask yourself this question in the context of the 8 key areas of your business. When you look at these areas, chances are, you’re going to find at least a dozen items that you think your business must do to be successful.
Here’s the challenge. Identify all of the items across your 8 key areas that you feel are crucial to the success of your company. Now, narrow them down to three items. I know. It seems impossible but I just went through this, myself. What I did, was to take each item and look at it as a “stack.” For example, if you’re looking at item 4 and realize that it kind of falls under item 1, then you can move it to that stack. In doing so, Item 1 is your critical factor and item 4 is one of its supporting factors.
Sometimes, your business is in hyper-growth mode. Other times, you’re trying to become hyper-efficient. Another possibility is one that we, as business owners don’t like to think about. It’s possible that your business is experiencing atrophy. If this is the case, then you’re likely trying to find ways to get things moving once again. So, there are different stages of life for every business and you must determine what your goal is for the next 1 to 3 years, based on which stage you are in.
When you conduct your SWOT analysis, what are the weaknesses that you identified? You know where you want to be and threats can be dealt with once you’ve identified the KPIs. But this is the time to identify where you are weak. The reason for this is that you can use these measurements to sure up your weaknesses. In turn, these can help you with hyper-growth or atrophy.
Remember, what gets measured gets improved. Therefore, you want to look at the measurements that you already have in place. If you’re thinking, “Justin, I’m not that organized. I don’t have any measurements in place,” that’s probably not true. Even if you’re just getting a monthly bank statement, that’s a form of measurement. Perhaps, you’re measuring your marketing through Google Analytics. These don’t have to be state-of-the-art proprietary measurements. You just need to identify the measurements that you already have in place.
This last question really rounds out the process of KPI application and development. At this point, you should be able to look at what you need to do to be successful, where you want to be, what your weaknesses are, the measurements that you currently have, and… the ones you wish you did. As you look for the areas that you don’t have existing measurements for, try to think of it from a perspective of, “Man, I wish I could see how we’re doing in…”
You may have to repeat this process (more than likely, you’ll repeat this process several times). But following these guidelines can help you simplify your KPI application and development process.
Identifying and implementing the KPIs to help you take your business where you want to be is a difficult and time-consuming process. Following these steps can help to simplify the process but it will take some trial and error. As I said, you won’t get it just right on the first attempt. That’s okay. Simply review what you’ve done and adjust, as needed.
Folks, life is hard but life is good. Identifying and implementing the KPIs in your business can be frustrating. But it doesn’t have to be. With a little patience and by following the process, you can make your KPI application, at least, financially simple.
We realize that this is a challenging task that many business owners just don’t feel they have the time and energy for. If this is you, reach out to us. The team at Financially Simple has helped many business owners with the KPI application process.