Business Performance Indicators: When you can't keep track of it all in your head!

When it comes to tracking the  business success of a social enterprise, it’s important to focus in on indicators that are truly important and directly useful to the decisions that you need to make.    When any small business gets off the ground, there is a constant process of evolution in which you are evaluating success and revising what you do  informally, with support from financial tracking and intuition.   But at a certain point, it can be really useful to get more systematic about tracking and analyzing data that can give you more insight into the health of the business and where you need to go next. This is particularly the case when:

  • You are growing and no longer can keep everything in your head.
  • You need to focus a team of people on building the business.
  • You want to engage investors.
  • You have a great business plan that you’d like to keep up to date, and have evolve with the business.

 

If you type ‘Business Performance Measurement’ or "KPIs' in Google, you’ll find there is an extraordinary amount of information on this topic for business.  Unfortunately, most of it is directed at big corporations that have significant resources and can develop sophisticated systems for tracking data.  This is not so easy for small social enterprises, and it doesn’t necessarily  fit the culture and way decisions are made.   Somewhere between informal decision-making and scientific business management is a happy middle ground for performance measurement!

 

In my experience working with various social enterprises, I’ve found that there are certain things that many social enterprises have found  quite useful to track.  Here is a summary of what tends to be helpful (outside of key financial tracking; for more information on this see my earlier blog).  While I’ve summarized some helpful indicators below,  I highly recommend going through the process of thinking through what is important to measure in an integrated way with measuring your social impact, and organizational sustainability using the Demonstrating Value Workbook.


Customers
At some point it’s really useful to get a better idea of who your customers are, where they come from and where they go.  At a high level, it can be good to look at customer number trends (are they increasing? decreasing?).   To understand this trend you may want to track success in acquiring new customers and retaining existing customers, particularly for ‘valuable' customers (those who have purchased recently, who have purchased frequently, and who have spent the most money).   Others useful indicators may be:

  • Share of revenue provided by top 3 customers – This can show whether you are  diversifying your customer base if that you risk relying on to few customers for most of your revenue.
  • $ revenue/customer – This can be helpful for tracking whether you are getting more sales for each customer, if this is a business development strategy..   
  • Conversion rate – How many leads you successfully convert to sales.


Production
The most common things to track about production are specific types of costs that are important to your product or service to see if you can keep them within a certain cost range.  For example, food costs are particularly keep an eye on  in food-related enterprises because they can fluctuate.   A few other production related indicators are:

  • Capacity Utilizationhow much you are actually use of equipment or other capital (e.g. building space, trucks, machines) in the enterprise, relative to potential use.  
  • Safety - safety incidences, and compliance with regulatory standards.
     

Product/Service Quality

Maintaining a certain quality of product/service is important to any enterprise, particularly if you are growing and want to make sure you are not compromising your product/service level.  A simple way to track quality is to track the number of complaints.  Other ways are to make quality checks (for products) before delivery.  A customer satisfaction survey can uncover much more detailed information about what customers think about your product or service.  This can also be supplemented by gathering customer testimonials which are nice to have for marketing purposes.

 

For more ideas on what to track, both relating to the business and the mission, see Demonstrating Value's Tools and Resources. 
 

blog type: 
Issues & Ideas
Tools
tags: 
customers
business performance