CPA in Baton Rouge | Key Performance Indicators for Businesses

Key performance indicators (KPIs) refer to a set of quantifiable measurements used to gauge a business’ long-term performance. KPIs are used by every industry to measure progress towards tangible goals, such as increasing revenue by 20% in a year, or improving customer retention rates by 5%. Using KPIs to evaluate specific areas of your business will show you where you can improve in order to better your financial success.

The Different Types of KPIs

KPIs can be organized into several different types, depending on what area of a business they affect. There are five categories:

  • Inputs – Inputs refer to the resources used in producing outputs (see below). For example, input KPIs for an office might include paper for printers and the cost of the electricity to power the computers.
  • Process – Also called “activity,” these measure the processes used in producing outputs (see below.) This could refer to the amount of time spent with a customer or the amount of people working on a specific project.
  • Outputs – Outputs refer to measurements that indicate the amount of work done and what was produced. In most businesses, outputs result in tangible products or hard data.
  • Outcomes – These KPIs are a little more abstract, focusing on accomplishments and impacts. Customer satisfaction and positive retention rates are two outcome KPIs every business can benefit from.
  • Project – Like outcomes, project KPIs are rather abstract. They are meant to answer questions related to milestone progress towards important initiatives. For example, adding a specific amount of new customers via a marketing campaign is a project KPI.

How Can I Use KPIs In My Business?

One important thing to keep in mind is that KPIs do not need to be tied to financial data. Outcome and project KPIs can help improve a business’ relationship with their customers and community. Every aspect of a business can be analyzed and improved through smart use of KPIs. Establishing them is an easy process:

  1. Write a clear goal for your KPI. Tie the goal to a key business objective, something integral to the organization’s success. Make sure the goal is strategic, otherwise it will not translate into tangible outcomes.
  2. Communicate the new KPIs to employees. Be sure to not only explain what the goal they’ll be working towards is, but why they’re working towards it. Someone on staff may just have an idea to improve the goal.
  3. Review your KPIs regularly. Use records and hard numbers to track progress. For example, if a process KPI is set to add another employee to a project to complete it faster, compare the rate of project completion before and after the goal is introduced.
  4. Evolve your KPIs if need be.  If the results fall short of expectations, fine tune the goals or change directions entirely. Change may bring about a new, more efficient way of getting to the same destination.

Key performance indicators are an effective strategy to get your business to where you want it to be. They are easy to define and act upon, making them reliable ways to track progress. For more information on KPIs and how they can be used to grow your business, contact our experienced accountants today for more information.

Apple Guerin Company LLC
Phone: (225) 767-1020
Url: https://appleguerin.com/
6421 Perkins Road, Bldg. A, Ste. 1B
Baton Rouge, LA 70808