Running a business can be complicated. You have to track many tasks and requirements. You must balance budgets, help clients solve problems, and inspire your people to deliver their best. You have a lot to manage, and many things get lost in the details. Soon, you spend more time putting out fires than growing your company.  

Management consultant and writer Peter Drucker is perhaps best known for creating one of modern management's most famous quotes: “If you can't measure it, you can't improve it.” So how do you measure it? Use Key Performance Indicators, or KPIs. 

What are KPIs? 

If you've spent some time at large companies, you'd have heard of KPIs. But these measurements are not just for big enterprises. They are an essential part of every business. They help measure performance and capture metrics that inform your plans. Your strategy will not be complete without KPIs. You probably already use a few —you just don't call them that. 

A KPI is a quantifiable measure of performance over time set to a specific objective. For example, you want to grow your number of customers, so you create a KPI for 'new customers each month' and set a timeline of six months and a desired goal. Let's say you want to attract 100 new customers every month. Now, you have a benchmark, a KPI, to use in meetings and add to a dashboard.  

KPIs are supported by metrics. A metric is not aspirational but instead information about what is happening. Every month end certain metrics are tracked against the KPIs set. If you see shortfalls, it means plans must be made in order to reach the KPI.

Without KPIs, tracking and managing your business goals becomes very convoluted.

Every business should use KPIs because they help with: 

- Business strategy 

- Team accountability 

- Organisational health check 

- Efficient and proactive planning 

What are examples of KPIs? As mentioned above, you likely use KPIs in your business. Common examples include: 

- Revenue per client 

- Absenteeism rate 

- Monthly sales growth 

- Return on Investment 

- Percentage of projects completed on time 

- Profit margin 

- Employee retention rate 

- Customer churn rate 

- Cost reduction 

Many of these examples can also be metrics. But remember: a metric is what's happening in your business, while a KPI is where you want to end up. Set KPIs, look at what the metrics tell you, and then adjust your plans to reach your KPI goals. 

How do you start using KPIs? 

Enterprises love using KPIs. Without those indicators, they would lose control of their operations. If you only track a handful of KPIs and it's easy to update the relevant metrics, you can track KPIs on a spreadsheet and use graphs or pivot tables to track performance over time. 

If you need a more elaborate system, such as something you can scale as you add KPIs, there are many excellent and affordable online platforms to help you set and track KPIs, such as Clickup, Monday, Asana, Klipfolio, and Scoro. Such services also provide KPI templates and KPI dashboards, and make it easy to share with other people, integrate projects, and create collaboration. 

How do you get the most out of KPIs? Here are some tips: 

- Define your strategic goals 

- Create KPIs that reflect those goals 

- Identify the expected results for the KPIs 

- Measure only the KPIs that matter—less is more! 

- Communicate your KPIs so people know what you expect 

- Evaluate and review KPIs at set intervals 

- Use SMART principles: Specific, Measurable, Achievable, Relevant, and Time-bound 

Welcome to the world of KPIs! You already use the concept; now turn it into the best way to realise your goals and take care of obstacles for good. With KPIs, you always know where your business is going.