A powerful single page tool for measuring success
It is essential to attain the performance zone each and every financial year to have a thriving, maintainable business over the long haul. Being in the performance zone only “every other year” is a recipe for misadventure.
How do you know when you are in the performance zone or the crisis zone? The answer is to identify the specific performance indicators that are meaningful to your business, its strategic direction and goals, and which will have a positive impact on revenue/sales/profitability in the very near future. Then measure and monitor these on a regular basis.
I recently read an article about the 75 Key Performance Indicators (KPIs) every manager should know. Really? Perhaps if you are on the executive management team of Disney or Microsoft. To be fair, the list of 75 was intended by the author as an overview of the KPIs commonly used by organisations today. Of course no one should choose all 75. The idea is to know about the range and types of KPIs and then to select the vital few that would be the most meaningful and relevant to your business. The trick is to not measure everything that moves within your business!
Results on a page
In my experience, a very powerful tool for measuring performance is a performance dashboard, sometimes called Results on a Page. Think of the dials on a car dashboard – at a glance, the driver can see speed, fuel, temperature and so on. A performance dashboard shows on one page, the 4 – 6 most important performance measures for your specific business. Measure the projects, deals, activities that will have a positive impact on your business success, sales and revenue and which will bring the business out of the crisis zone and into the performance zone. Be specific. Don’t guess. This single page should give you the complete picture at a glance. Use graphs, diagrams, tables, dials and colour to illuminate the information. Using “traffic lights” is a very powerful and easily understood visual queue. Results above target are coloured green, results at target levels are amber, results below target are coloured red. Update your dashboard at intervals that suit your business sales cycle (daily, weekly, monthly). The start of a new financial year is the ideal time to develop a performance dashboard for your small business. Sometimes being in the performance zone is defined in terms of making progress toward large strategic goals, but often success is simply the repeated, periodic achievement of the 4 – 6 most important performance measure for your business.
Typically KPIs fall into 5 main categories: