Key business indicators that every entrepreneur must master
Every entrepreneur, whether running a very small company or creating a new one, has in mind the need to control, maintain or improve the results of their company: sales, stock levels, order book, medium basket, new markets, new products. To effectively measure their company’s performance, entrepreneurs need to establish indicators.
- Performance indicators refer to the value and return of investment, for a partner or investor, with a view to capital gains in resale, for example; they must be sought first and foremost in accounting documents. The most used are sales (global, by product or service, or by department), gross margin, EBITDA (gross operating income), etc.
- They also serve to measure customer satisfaction and the quality of relationships with them; for example, these indicators can be found in Internet forums, in customer surveys or using CRM tools.
- All the internal processes of a company can be controlled by means of indicators, with the aim of improving the profitability and effectiveness of the department or organization. The time spent on administrative procedures, the rates of absence and resignation of employees, the training rates and the number of contacts made per employee are some of the most used indicators.
- The indicators will provide information on the added value provided by the product or service, the company’s innovation, the brand’s reputation, etc. They will highlight the conversion rate of a budget into an invoice, an indicator of reputation on social networks (number of “likes”, “retweets”, etc.), the volume of business generated by new products or services, the investment index, etc.
- In a website, the conversion rate is equivalent to the percentage of customers obtained in relation to the number of visitors, so it’s a very useful indicator.
- The purchase amount is the amount spent to attract a new customer. This cost includes marketing expenses, commercial offers, and may include tools. For young companies that have not yet reached the profitability threshold, this indicator is especially important in the eyes of investors.
In short, key performance indicators are essential tools for running your business, so it’s important to choose them meticulously to ensure your company’s success.
